Ofcom has handed telecomms company TalkTalk a £3 million fine for billing customers for services they had not received.
The communications watchdog said an investigation into TalkTalk and Tiscali UK in July 2010 found both companies had wrongly issued bills to people, particularly those who had closed their accounts.
Tiscali was bought by TalkTalk in July 2009, and has since been rebranded TalkTalk.
Ofcom today said it opened an investigation into TalkTalk and Tiscali UK last year after receiving more than 1,000 complaints.
It found the firms wrongly issued bills in just over 62,000 cases between January 1 and November 2010.
Ofcom issued a legally-binding notification in November, warning steps had to be taken to sort out the billing problems by December 2.
But the watchdog said despite taking some important steps to comply with the rules, such as changing customer records management systems, almost 3,000 consumers were still incorrectly billed between December 2, 2010 and March 4 this year.
It said it had issued the £3 million financial penalty to "reflect the seriousness of their breach of the rules and to act as a deterrent to them and other telecoms companies who must comply with the rules".
TalkTalk had to refund customers by December 2, 2010, and Ofcom said more than £2.5 million had been paid in refunds and goodwill payments to more than 65,000 affected consumers.
The watchdog can fine companies which breach telecoms rules up to 10% of their relevant turnover.
A statement said: "Ofcom considers this to be a serious breach of the rules. However, Ofcom is issuing TalkTalk and Tiscali UK with a lower penalty than they might otherwise have been given, had they not taken steps towards complying with the rules, and taken action to remedy the harm they caused to consumers."
The fine, which is passed on to HM Treasury, had to be paid within 30 days.
Dido Harding, CEO of TalkTalk Group PLC, said: "We are pleased that Ofcom has recognised the significant steps we've taken to solve this problem and has acknowledged that the issues surrounding the integration of the Tiscali business in 2010 are behind us.
"The billing migration was completed last year and in the last three months Ofcom has received only 12 complaints on the issue.
"In addition, as announced in February, every customer impacted has been reimbursed and compensated with payments totalling over £2.5 million.
"Last year I recognised that we needed to invest in our systems, processes and customer services - and we are making significant progress.
"We have seen a 40% year-on-year reduction in customer service calls; Ofcom receives three times fewer calls about TalkTalk than they did at the height of the Tiscali integration; and our five million customers are more loyal and more satisfied than they were 12 months ago.
"We are of course disappointed at the scale of the fine and feel it is a disproportionate penalty; however we are striving to continually improve and invest in customer experience and are pleased at the clear progress we are starting to make."
Diane Gaston, head of communications at Consumer Focus, said: "This fine is a welcome move by the regulator. It is important to send a clear message to the industry on how essential it is that firms play fair by their customers.
"It is totally unacceptable for any company to bill customers for services they haven't used.
"This is a failure of the most basic customer service. It's extremely disappointing that, even after these companies were aware of the problem and took some steps to fix the issue, they continued to let their customers down."