The letters threatened appropriate action, however the lawyers had been false. In certain full situations Wonga added costs of these letters to clients' records.
The town watchdog, the Financial Conduct Authority (FCA), stated 45,000 clients will be paid.
Wonga has apologised and stated the strategy finished nearly four years back.
The town regulator has told the BBC a file has been sent by it to your authorities.
The business may be the British's biggest payday loan provider, making almost four million loans to at least one million clients in 2012, latest numbers reveal.
A study unearthed that Wonga delivered letters to customers from fake law offices called "Chainey, D'Amato & Shannon" and "Barker and Lowe Legal Recoveries".
The master plan would be to make customers in arrears think that their debt that is outstanding had passed away to a lawyer, with legal action threatened in the event that financial obligation wasn't compensated.
This tactic was being used by the company to increase collections by piling the stress on clients, the regulator said.
"Wonga's misconduct had been extremely serious since it had the end result of exacerbating a situation that is already difficult customers in arrears," stated Clive Adamson, manager of guidance during the FCA.
"The FCA expects businesses to pay for attention that is particular fair remedy for those people who have trouble in fulfilling their payday loans in Louisiana loan repayments."
The specific situation took place between October 2008 and November 2010, and involved Wonga as well as other businesses within its team.
As this occurred before the FCA overran the legislation of payday lenders, it really is not able to fine Wonga. Moreover it stated there is no unlawful research since it wished to set up a payment scheme as soon as possible and an unlawful probe would devote some time. Impacted clients will receive about Р’Р€50 each.
Rather, Wonga will begin calling clients in July to supply settlement, with cash apt to be compensated by the conclusion for the thirty days. This may be either paid in money or clients may have their outstanding debt reduced.
"we wish to apologise unreservedly to anybody suffering from the historic commercial collection agency task as well as any stress triggered because of this," said Tim Weller, interim leader of Wonga.
"The training had been unsatisfactory and now we voluntarily ceased it nearly four years back."
Whoever may have changed target when you look at the period that is intervening contact Wonga.
Labour MP and campaigner against pay day loans Stella Creasy has questioned the possible lack of unlawful research.
"Why in those circumstances where clients of Wonga charged commercial collection agency charges of these letters is maybe maybe not authorities matter?," she asked on social networking site Twitter.
Richard Lloyd, professional manager of customer group Which?, said: "It is appropriate the FCA is having a tougher line on reckless financing plus it does not get more reckless than this.
" it really is a shocking brand new low for the payday industry that is currently dogged by bad training and Wonga deserves to really have the guide tossed at it."
The research ended up being started because of the FCA's predecessor, the Office of Fair Trading (OFT). Wonga stated it stopped the strategy voluntarily then provided information towards the OFT.
This year, Wonga discovered that it had miscalculated some customers' balances in addition, in April.
This triggered 200,000 people overpaying the organization. Wonga stated that the majority overpaid by lower than Р’Р€5, and a bigger quantity underpaid.
Those who overpaid will likely to be contacted by Wonga, therefore the debt that is underpaid be terminated.
Mr Weller stated the organization "will study from these errors" and had been strengthening its controls that are internal.
The issues for Wonga come soon after its employer Niall Wass quit after half a year within the work of leader. Mr Wass joined up with Wonga in January 2013 as main operating officer - following the fake attorney strategies finished - and became leader in November.
Previously this chairman and founder Errol Damelin also announced that he was planning to quit month.