Many fines incorrectly imposed after dental treatment are because of mistakes over patients' addresses, says a health watchdog.
The latest figures show 385,000 fines were issued in the last financial year – and dentists say tens of thousands of £100 fines have been wrongly applied.
Healthwatch in Kirklees says problems with address records are a big factor.
The NHS accepts this accounts for some of the incorrect fines and says it is planning an information campaign.
The British Dental Association (BDA) last week called for urgent action to tackle a wave of £100 fines being wrongly applied to dental patients who had free treatment, with particular concerns about confusion among vulnerable people.
They had been fined following checks designed to stop people from fraudulently using free dental treatment when they should be paying.
The BDA's research claimed as many as nine in 10 fines that were challenged were subsequently overturned, suggesting that many penalties were being wrongly applied.
Figures from a wider range of NHS fines suggest that the rate for withdrawing penalties after they were found to be incorrect is closer to 50%.
Healthwatch, which represents people using health services, has been researching the reasons behind this problem and says many mistakes seem to be caused by how patients' addresses are recorded.
Director Rory Deighton says differences in spelling, variations in how addresses might be presented or mistakes in postcodes could be misinterpreted as being a different identity.
When addresses do not match information held in databases used for checks, penalty fines could be triggered, he says.
The NHS Business Services Authority, which oversees the fining system, says there is also a difficulty with patients not updating their addresses, leading to discrepancies between their current addresses and addresses held in databases.
The agency says it will improve the information available to patients and make forms easier to complete, after concerns there was confusion about which benefits made people eligible for free treatment.
A spokeswoman said the NHS wanted to make sure that patients and staff "understand the rules around eligibility for free treatment and the consequences of claiming incorrectly", but she admitted there is "still a lot of confusion".
Mr Deighton said: "There is something intuitively wrong about an NHS organisation sending out incorrect penalty charge notices.
"Thousands of people every month receive these notices, increasing stress in households all over England.
"All we are asking for is a simple system, where eligibility for free treatment is clear to everyone. The current system is unclear and unfair on patients."
Mr Deighton suggested that where there were uncertainties about addresses, checks should be made before any fine was issued.
In response to growing concerns about the fines, the Dental Defence Union (DDU) has warned dentists to alert patients to rules about payment exemptions.
"Patients are often aggrieved by being fined when they believed they were exempt," a DDU spokesman said.
"A large number of complaints of this sort come from the fact that patients feel they were either given poor advice or misinformation when they were filling out the exemption form."
- Anyone concerned about fines or seeking information about free dental treatment can call a helpline number, 0300 330 1293.
An online checking tool is available and there is more online information about eligibility for free dental treatment.