Melbourne City Council has agreed to refund more than 1,000 parking fines due to confusion about the difference between the letter ‘O’ and the numeral ‘0’.

Victorian Ombudsman Deborah Glass says senior officers in the council's parking branch have displayed an “overzealous” attitude towards targeting drivers, and “applied an overly rigid approach to parking errors”.

She has found that over 1,200 drivers were fined $83 each after they had parked legally but confused the letter ‘O’ with the numeral ‘0’ when entering their details in the city’s PayStay app.

“The Council knew the number 0 and letter O were virtually indistinguishable on registration plates, and drivers would not be aware they had made an error,” Ms Glass said.

The council has agreed to refund all PayStay fines where the mix-up occurred and review all future complaints on the matter individually.

Some of the fines date back as far as 2017.

Melbourne City Council’s 2019-20 budget shows it collected $41.2 million in parking fines, and $55.9 million in parking fees.

Many had complained that the city was trying to rake in as much revenue as possible, but “the allegation that the Council was improperly raising revenue was not substantiated”, Ms Glass said.

However, she said senior managers in the parking branch showed a mindset that “the customer is usually wrong and drivers must be punished for their infractions, no matter how small or how great the mitigation”.

“This attitude continued for years, despite some council officers expressing concerns about it to management,” she said.

“This mindset was further illustrated by the council rewording its Penalty Reminder Notice, ostensibly to encourage drivers to make payments as soon as possible, but against their own legal advice that the wording was misleading.”

Ms Glass says the council has accepted her recommendations.

“The council has not shirked its responsibility for years of unfair decisions and has agreed to make amends, both on an individual and systemic level,” Ms Glass said.