Thousands of drivers in London may be affected by the ruling
Thousands of parking tickets paid by credit card could be cancelled after a council's charges were ruled unlawful.
Camden Council has been charging 1.3% extra for tickets paid by credit card.
But a firm claimed the extra charge is unfair - and the Parking and Traffic Appeals Service (Patas) agreed, saying the entire ticket should be cancelled.
The ruling could also affect the boroughs of Harrow and Merton, which also charge extra to pay tickets by credit card. Camden Council may appeal.
Harrow has been charging people extra to use credit card for 18 months.
In January, London General Transport Services Limited was given a £120 penalty charge notice by Camden Council.
But the company appealed, claiming it was unfair to charge an extra 1.3% for a ticket that they had no choice but to pay.
Patas adjudicator Henry Greenslade agreed.
Referring to the rules by which councils must abide, he said: "The words 'authorities cannot justify applying surcharges in relation to credit cards' could not be clearer.
"Authorities cannot justify applying surcharges for their use."
'Could be challenged'
He added: "I find the penalty charge in this case did exceed the amount applicable - accordingly, this appeal must be allowed."
If Camden Council is unsuccessful with its appeal, every fine paid by credit card since the 1.3% charge began in January could be challenged.
The council has given out £26m in parking fines this year.
Neil Herron says Camden Council's "greed" may cost them dear
Builder Richard Chaumerton, 46, from Kentish Town, north west London, is challenging five tickets which he paid by credit card.
He said: "It's a disgusting, vexatious state of affairs.
"Camden Council are behaving like the Sherriff of Nottingham - they think they can make up all these charges, regardless of what the law says."
Parking campaigner Neil Herron, also battling tickets on grounds of the credit card charge, said: "Out of greed this council has been charging an extra 1.3% - it could end up costing them £12.5 million."
A Camden Council spokeswoman said: "We sought independent legal advice when introducing credit card charges and we remain satisfied this is sound advice.
"The detail will be reviewed by our lawyers and the council will take a decision once we have received advice.
"In the interim, Camden has stopped the credit card fee."