A youth worker from north London who was caught trying to save 65p by using his wife's Oyster card on a London bus has described his disbelief after Transport for London (TfL) threatened to take him to court and then offered to settle if he paid £250.

The man, who has asked to remain anonymous, admits he was stupid to use his wife's card, but has challenged the body behind London's transport network to explain how a first-time 65p fare evasion can land someone with what he calls such a disproportionate fine.

Oyster is the electronic touch-and-go card that can be used on bus, tube and overground services in London by residents and visitors to the capital. Most people caught misusing an Oyster card are given a £50 penalty fare – reduced to £25 if they pay quickly.

In this case, the man's offence was to use his wife's card. At the time she was receiving jobseeker's allowance, and was, as a result, entitled to reduced fares. After boarding the bus and paying with her card, he was challenged by a ticket inspector to produce the required photo ID, at which point, he says, he confessed to his "crime".

"At all times I was courteous and polite and co-operative. The ticket inspector himself advised me to give a false story to get off the hook by saying I'd brought the wrong Oyster card by accident. Perhaps rather foolishly in hindsight, I chose to come completely clean," he says.

Having confessed, he says, he expected to be treated reasonably and to pay some kind of penalty. However, he was initially threatened with a court appearance, and then offered an out-of-court settlement if he paid TfL's £250 administration fee.

"I appreciate I was not totally honest or this would not have happened in the first place, but after the initial foolish decision I have been totally honest and sincere. I feel that the £250 I have been forced to hand over to halt a court case is a grossly unfair and disproportionate charge. I told the truth to the prosecutions team and apologised unreservedly. If I'd lied I would have been off the hook now, and it feels as if the system is flawed in that it unjustly punishes middle-class people who are prepared to admit their guilt."

Upset when he later learned that he should have been offered the chance to pay a £50 penalty fare, and feeling harshly treated, he asked TfL to justify the £250 settlement offer.

"When asked, under the Freedom of Information Act, to provide details of how this £250 was made up, the prosecution team could not come up with a satisfactory answer. They did give me a slight further breakdown of costs but these costs were unrealistic. Frankly, it looks like this is a revenue exercise and I feel I am paying not just for my own small folly, but also for other people's refusal to play the system," he says.

An examination of TfL's revenue enforcement and prosecutions policy suggests the man may have been treated harshly, particularly as this was his first offence. The rules suggest TfL may decide to issue an offender with a warning letter in lieu of prosecution, where the offender admits his or her irregular travel and the risk of re-offending is considered minimal, and where it appears that there has been a genuine mistake.

A TfL spokesperson defended its action: "TfL's revenue enforcement and prosecutions policy applies a firm but fair approach. Most first offences on buses are dealt with by way of a penalty fare, which is where TfL gives the benefit of the doubt to an offender on the first occasion.

"Using a discounted pass issued to another person, however, is considered one of the more serious offences where our policy allows for prosecution for a first offence. Where legal proceedings have commenced and a court summons is issued, TfL will always consider any mitigation put forward by a defendant and any request to settle the matter out of court, as was done on this occasion.

"Each case is considered on its own merits. After due consideration of this particular request, where the defendant had no previous offences, admitted the offence, agreed to accept a formal warning and to pay TfL's legal costs, an option was given to settle the matter out of court in the sum of £250.

"By settling out of court, passengers can avoid a criminal record and potentially a more severe penalty at court."

Fare dodging cost TfL £75m last year, with most of the loss on buses. One in four passengers believes it is "easy" to avoid paying and one in 10 says it is "worth the risk", according to a TfL survey.

"Fare dodgers are a parasitic scourge on this city costing London millions of pounds," said the mayor Boris Johnson when he announced a clampdown on cheats, with more plain-clothes ticket inspectors and police operations.

Some people would argue there is a risk-free way of using someone else's Oyster card to enjoy free travel. The small print states that Oyster cards with travelcards/season tickets on them can't be lent or transferred to someone else. But – and Money is not endorsing this – many people already regularly borrow their husband's/wife's/friend's unregistered Oyster card (those used as weekly travelcards don't need to be registered). Provided there is no photocard, it is hard to see how they would ever be rumbled, even if a ticket inspector demanded to see "their" plastic.

TfL says its rules state that people "should not do that", and if they do, and they are found out, they could be fined or prosecuted.