Gill Murdoch and her husband, Ken MacKinnon, were surprised when a threatening lawyer's letter came through the door of their Inverness home. It demanded that they pay £500 immediately because they had allegedly made available a copy of a computer game – Risk II – so that it could be pirated across the internet. The pair, 56 and 68 respectively, were stunned, not least because neither plays computer games. "We're not into things like that," Murdoch says. "We like to walk our dog, or cycle or garden – we don't use the internet for anything other than for Googling information."

She had been accused of making Risk II available on a peer-to-peer basis – a filesharing system allowing anybody to make a copy of the game. "I didn't even know what peer-to-peer was," Murdoch adds, admitting she had to ask a friend to explain what she had been accused of. Her first reaction was to call the law firm that had sent the letter. "I rang Davenport Lyons almost immediately, and spoke to a man who refused to give me his name. I never found out who he was," says Murdoch.

"What happened is that I was told it didn't matter whether we did it or not. I was told we must have Wi-Fi and somebody else used our connection – but we don't have Wi-Fi. Then I was told we must have failed to protect our computer with Norton – but we had. He seemed not to care whether we did it or not," she recalls. Worried by the call, she "thought for a moment I'd lost the house – because of all the legal bills I might have to pay".

Hostile correspondence

Sure of their innocence, the couple consulted various people. The council's trade standards watchdog suggested they save up for a lawyer, but eventually, with the help of Which?, the consumer organisation, the claim was fought off after several months of hostile correspondence. But they were hardly alone in receiving an unexpected demand through the post. Over the past two years, three law firms, Davenport Lyons, ACS:Law, and Tilly Bailey & Irvine, have been targeting individuals accused of downloading or sharing pirate material – typically demanding between £500 and £700, amid accusations that the homeowner has been pirating copyright material.

What Murdoch's case and others like it demonstrate are the problems inherent in trying to suppress internet piracy by identifying individuals who have supposedly engaged in the illegal filesharing of music, television, film or games – and seeking some form of legal redress. Until now this has been a minority sport, but the Digital Economy Act will make the targeting of households more likely. The act could mean that serial pirates have their internet connections cut off, if they can be accurately identified.

Andrew Heaney, the director of regulation at Talk Talk, the internet provider most concerned about the repercussions of disconnection, says that cases such as Murdoch's show the difficulties with the planned legislation. "The essential flaw is always the same: copyright holders can link piracy to IP addresses, and these can be matched to a household's internet account. But there could be tens of people using an IP address – members of your family, visitors, neighbours, or somebody more unscrupulous."

He says the most determined pirates – the criminals – will cover their tracks, hijacking other people's internet connections if they can. "What the digital economy bill proposes is to place a burden of responsibility on the person owning the internet connection – you have to prove it wasn't you who pirated that film, otherwise you risk being disconnected," Heaney says.

The indications so far are that hundreds and possibly thousands of people have been wrongly identified, on the basis of flawed evidence – judging by the "hundreds of people" that Deborah Finch, the head of legal affairs at Which?, says she is aware of.

Others may, of course, be guilty, but there will also be instances in which the sum demanded has been paid because people want a quick resolution, or because they decide to avoid awkward conversations and causing tension in the family if there are suggestions that somebody in the home has been watching pornographic material. "We think there could be tens of thousands of letters that have gone out, in a practice that amounts to little more than speculative invoicing," says Finch. Robert Cox, who lives in Northamptonshire and works in information technology, was accused by ACS:Law of making a computer game called Two Worlds available for others to copy via peer-to-peer networks. ACS:Law's nine-page letter said its client, a little-known games company called Reality Pump, had "retained forensic computer analysts" from a company called Logistep, and their work showed that his home internet connection had been used to distribute the computer game illegally.

Specialist knowledge

But these forensic techniques all adopt essentially the same approach that will be used under both current copyright law to launch civil claims, or under the new act where the punishment could culminate in the loss of a home's domestic internet use. Fortunately for Cox, he had enough specialist knowledge to reject ACS's demands, and eventually the law firm went away.

Major media groups have been careful to avoid suing clients – they saw the problems that it caused music giants in the US when they took action against Briana Torres, a 12-year-old girl, and pursued Gertrude Walton, an 83-year-old woman who had died two months before the writ arrived. Other, smaller media companies are behind the current spate of legal actions, as an examination of the legal papers shows; and there is concern that there will be opportunistic, unscrupulous companies that try to use the threat of disconnection to force people to pay up.

When Davenport Lyons targeted Murdoch in 2008, the firm represented a medium-sized computer games firm, Atari. However, after the adverse publicity caused by the campaign, Atari pulled out, and sent letters of apology to wrongly targeted customers a year later, saying it regretted the distress caused. In November, ACS:Law applied to the Royal Courts of Justice requesting that several internet providers give up details of customers linked to suspect IP addresses. It was acting on behalf of a little-known company called MediaCAT, which had the right to pursue legal actions against anybody pirating any one of 291 pornographic films owned by five companies, including two controlled by David Sullivan, the adult entertainment magnate who is also the co-owner of West Ham football club.

Andrew Crossley runs ACS: Law, where he is the sole principal. Last year his firm sent out about 6,500 demands for payment, taking over some of Davenport Lyons's caseload, but a major expansion of his activity means that he plans to send out 50,000-60,000 during 2010. He says "a sizeable percentage" of people targeted pay up, and there have only been occasional cases of mistaken identity. "We are very confident in our technology," he says, adding that "our objective is to reduce the infringment of our clients copyright" and that "anecdotally, there is evidence to suggest that what we are do works".

ACS:Law plans to continue with its letter writing campaign when the disconnection provisions in the Digital Economy Act come into force, arguing that the threat of a fine is a greater deterrent than disconnection. But Crossley says that the measure "gives the whole area of digital copyright enforcement greater credibility, because it works under the same principles" - using individual IP addresses to identify suspect filesharers.

Yet not all the law firms are so comfortable with their letter writing approach. Davenport Lyons declined to comment on its activities, but it abandoned letter writing last year, transferring staff and work to ACS:Law. On Friday evening, Tilly Bailey & Irvine, which had sent out about 250 letters, said it would drop its work, after a complaint made by Which? to the Solictors' Regulation Authority. TBI had said previously that it "vehemently [denies] any allegations that our letters are bullying or heavy-handed", but the reactions of the scared and unsettled recipients of these letters tell a different story. The worry has to be that those keenest to use the act to threaten people with disconnection will be ruthless operators who act for owners of content that nobody would describe as mainstream. If past experience is anything to go by, the number of complaints will rise, and miscarriages of justice will increase too.