"This meant that some customers, many of whom are in a vulnerable situation, may have suffered detriment through wasted journeys to try and top-up at shops which no longer offered the service, or in some cases may have gone off supply," Ofgem said.
Worse still, British Gas also failed to tell the missed-out customers that the minimum top-up had been increased from £1 to £5.
Most of its customers were told of the change in December 2019.
Ofgem said that, not only did that leave customers with too little time to try and switch supplier, but the notice contained no phone numbers for customers to call for assistance, only links to the internet.
Those customers unable to use or access the internet may therefore have been unable to contact British Gas for help.
Furthermore, British Gas did not operate its general enquiries line on 1 January when the new system went live.
When Ofgem contacted British Gas about the issues, the company offered to pay £1.48 million compensation to customers and £250,000 into Ofgem's voluntary redress fund to support people struggling to pay for energy in the winter.
British Gas said: "We recognise this transition was not as smooth as it should have been and we would like to apologise again to any customer impacted."
A spokesman added: "We know that some prepayment customers are vulnerable and we take our responsibilities to them very seriously."
