Ofcom has branded TalkTalk “dishonest, misleading and deceptive” in a damning report on the company’s sales tactics.
The telecoms regulator has said that TalkTalk breached the Communications Act 2003 by providing "misleading information" and mis-selling products.
Ofcom also said there was evidence TalkTalk had engaged in an illegal practice known as "slamming" - by switching consumers to TalkTalk without their permission.
The regulator's investigation was launched in November last year, following complaints from TalkTalk customers. The provider now has until 20 June to tell Ofcom how it will remedy the situation.
Ofcom has outlined eight conditions that should be met in order for TalkTalk to stop breaching market rules. These include allowing customers who were mis-sold a service to cancel their contract without penalty - regardless of how long they have been with TalkTalk.
In a statement, TalkTalk said it took its "responsibilities extremely seriously".
"TalkTalk has thousands of customer transactions each day on the telephone, online and in person and we're committed to providing information that is clear and can be easily understood," said the provider.
"We have processes in place to help our employees be accurate in every case and we invest heavily in the training and monitoring of our sales and retention teams. Improvements in the language used and the materials provided are constantly being made and we will be providing Ofcom with detailed information about our ongoing programme to maintain the highest standards in all of our transactions with our five million customers."
But this is not TalkTalk's first run-in with the regulator. TalkTalk Group, which operates both TalkTalk and Tiscali, was ordered to pay nearly £2.5 million in refunds and compensation in February after Ofcom found it was billing customers for cancelled services.