Payday lender Wonga must pay £2.6m in compensation after sending letters from non-existent law firms to customers in arrears.
The letters threatened legal action, but the law firms were false. In some cases Wonga added fees for these letters to customers' accounts.
The City watchdog, the Financial Conduct Authority, said 45,000 customers would be compensated.
Wonga has apologised and said the tactic ended four years ago.
An investigation found that Wonga sent letters to customers from fake law firms called "Chainey, D'Amato & Shannon" and "Barker and Lowe Legal Recoveries".
The plan was to make customers in arrears believe that their outstanding debt had been passed to a law firm, with legal action threatened if the debt was not paid.
"Wonga's misconduct was very serious because it had the effect of exacerbating an already difficult situation for customers in arrears," said Clive Adamson, director of supervision at the FCA.
"The FCA expects firms to pay particular attention to fair treatment of those who have difficulty in meeting their loan repayments."
The situation occurred between October 2008 and November 2010, and involved Wonga and other companies within its group.
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Tiny fine in the scale of the company and what the fuck is it with big business being able to buy away criminal acts, why the fuck are the police not involved and people being charged at this company this is a criminal act.