In a motel room 100 miles from home, a middle-aged man using the name Peter counts the cost of one of the internet's latest trends: paedophile hunting.

"I have lost everything apart from my life. I have lost my job, I've lost my home, I've lost family, friends. I am a shell of a man. I am completely broken," he told the Guardian.

In May, this married former member of the armed forces was the target of a vigilante using the name Daemon Hunter, part of an online subculture in which members of the public pose as children to lure men to meetings where they accuse them of grooming children for sex. The filmed encounters are then posted on YouTube for all to see, and after one such encounter, Peter is in hiding.

It is a form of rough justice that has the power to expose the guilty – but also to wreck the lives of the accused regardless of whether there is evidence of a crime. The "hunter" phenomenon has been fuelled by the ever increasing speed and reach of online social networks and an undercurrent of public concern that police are struggling to trap online sex offenders. Hunter groups have been active in the Midlands and some targets have been convicted, but police want it to stop.

The Daemon Hunter vigilante who targeted Peter in Staffordshire used the slogan "Public against paedos". He pretended to be interested in his target on an adult dating site and they arranged to meet in a branch of Costa coffee. Peter thought he was meeting an 18-year-old, and insists he is not a paedophile or child groomer. Only when he was waiting in the cafe did a text come through saying "she" was 15 and that he immediately got up and left.

It was then that Daemon Hunter accosted him in the street, accused him of trying to meet a 15-year-old for sex, and chased him through town filming him. Peter told the Guardian: "He said: 'I think we need to talk because you're a fucking paedophile.' I said: 'What do you mean mate? She's 18, that's what I was told. I've just had a text message up there saying she's 15 and that's why I've walked away.' Next thing I know he got his phone up filming me, calling me a paedophile, asking her age. I was shocked. He started shouting I was a paedophile in the middle of town. I thought 'I am going to get a kicking here' so I just legged it."

Within hours, the vigilante uploaded footage of the sting on to the internet along with Peter's mobile number. That night his phone was jammed with abusive texts and voicemails, which he said included death threats.

So he fled north in his car, only returning when he thought the worst was over. Later, he said his house was hit with bricks and that his wife tried to kill herself with an overdose of pills. He was so scared he was reduced to hiding in a cupboard when the doorbell rang.

Staffordshire police reviewed the evidence and concluded there was no case for any prosecution, but the damage was done. More than 5,000 people viewed the film and Peter has now moved to the other side of the country, cut off from family, friends and work.

Sam, from the West Midlands, said he was beaten to the ground near his home after a prolific Nuneaton-based vigilante known as Stinson Hunter posted a video that appeared to show him travelling to meet an 11-year-old girl. Stinson Hunter's real name is Kieren Parsons, a 32-year-old who has been working on stings for almost four years with a small group of friends. He has previously told how he was partly inspired by the American TV programme To Catch a Predator, in which reporters pose as children to entrap child groomers.

Sam's story began when he was talking to a person on the dating site Badoo. After a while someone told him she was 11 and asked if it put him off. He said it did but he didn't mind chatting from time to time.

"I knew she wasn't an 11-year-old because she sounded so mature and when her picture was up I said to her that's a picture of a 17- or 18-year-old, I think I am being fooled here. She said no, I'm 11." Later they had an adult exchange in which she asked about sex. "I discussed slowly what happens," he said. "After, I said: 'I don't think you are 11.' An 11-year-old would not respond to me in this nature."

Video screengrab from the website of the Leicestershire anti-paedophile group Letzgo Hunting.

Soon, "she" asked to come and meet him. He made excuses to avoid it, but shortly afterwards, Stinson posted Sam's picture and number online and accused him of grooming. Hate messages poured in. "Kill threats, you're a paedo, you're this you're that," he said. "I was panicking, I couldn't eat." Sam went to the police and said he had been talking to someone he didn't believe was a child.

Then Stinson called. "He said if you think you are not a vile person, come and see us and we'll have a chat with you and leave it at that," Sam said. Stinson gave him a contact at Nuneaton police station who he said had previously handled his cases. According to Sam, the officer told him not to go because of the risk that a film shaming him would be broadcast. But it seemed a chance to clear his name and he went.

"Straight away the camera was on my face," he said. "There were about four people in there. Straight away all the bad questions. I just started crying thinking what the hell have we come into. He has made the nation believe that me and my friend had actually come to meet the 11-year-old."

Detective Inspector Chris Hanson, of the West Midlands police public protection unit, said Stinson's video sting on Sam had been thoroughly investigated by specialist child abuse investigation officers who also made their own extensive inquiries and found no evidence of any sexual offences. But Sam said that came too late to prevent social workers asking him to move away from his children temporarily and his life being threatened by strangers.

When approached by the Guardian to comment about his activities and Sam's claims, Stinson Hunter declined to comment.

Despite their belief that they have been unfairly pilloried in public, Peter and Sam feel they are lucky. The family of Gary Cleary can only grieve. The 28-year-old killed himself four days after he was arrested and was released on police bail following a sting by a Leicestershire group, Letzgo Hunting, in which they posed as a 14-year-old girl. They have denied any responsibility for his suicide.

Gary Cleary, 28, who killed himself four days after being arrested and bailed following a sting by the anti-paedophile group Letzgo Hunting.

Police admit they have been torn over whether to embrace or reject the morally fraught method that may secure useful evidence but also risks the destruction of vital evidence and the safety of children if genuine paedophiles are discovered before the police can intervene.

There have been convictions. James Stone, 23, was jailed for child sex abuse after a girl's mother approached Letzgo Hunting worried about what he had done to her daughter. Nottinghamshire police, however, said the sting played no role in the conviction. Maurice Ingram, 66, pleaded guilty to a charge of attempted sexual grooming following a sting by Stinson Hunter in which he posed as 15-year-old girl and they arranged to meet at a park.

Police say some hunters have exposed people whose potential child grooming behaviour was previously unknown, but that in the majority of cases examined the targets do not reflect any sexual interest in children.

Stinson Hunter has even admitted as much."Guys that I catch generally aren't paedophiles," he told supporters in an online broadcast in August. "A massive percent of them are guys that have been lonely and someone has paid them attention and they've jumped on it."

In an anonymous interview with the BBC in the Midlands last month, one of Letzgo Hunting's leaders insisted it always made clear early to targets that they were talking to someone underage, and never prompted meetings themselves. "The fact that we have caught 11 people trying to meet children for sex in one area of the country says the police aren't doing enough," he said.

But Letzgo Hunting declined to comment further for this article, saying: "There are no more operations. The group's activities are over."

A significant problem for police is that the tactic of posting the videos online before approaching the police allows genuine criminals time to destroy evidence. "We are spending lots of time and effort with these cases and finding lots of deleted material that we can't access or even a computer-shaped hole in the suspect's bedroom," one police source said.

Now the targets of stings who have spoken to the Guardian say they are considering legal action. But police are cautious about the prospect of securing criminal convictions in the case of wrongly accused people.

Peter Davies, the Association of Chief Police Officers' lead on child protection and the head of the Child Exploitation and Online Protection agency, said that was only possible if it could be established there was "criminal causality between the actions of the vigilante groups and the harm that came to anybody" and that prosecutions could follow in extreme cases.

Civil action may be an alternative. "I will be taking legal action against this person, because they just can't do that," said Peter. "I have consulted some people and I will be taking civil action against him. I have lost a £45,000-a-year job. I was a womaniser. That's what I've done wrong, but I have been accused of being a paedophile when I was completely innocent."

Sam said he had already spoken to solicitors about the possibility of bringing a defamation case, but was worried about the cost.

Davies said the vigilante tactics were "hugely inadvisable – to victims, to suspects and also to innocent people who may wrongly be suspected".

"If someone is wrongly accused of this in a hugely public way that makes people who live with them, live near them, work with them assume they have committed the offence. The temptation to take themselves out of it [kill themselves] may be just as great even if they are innocent and that is an appalling consequence to contemplate," he said. "Vigilante groups like this should not continue because they are taking risks they don't understand."

He said there were at least 5,000 police officers trained and accredited in child protection and urged parents who are concerned that their children are being targeted to contact the police and not vigilantes. "I can guarantee that if a parent thinks their child is being targeted on line they will get a far better response from the police or Ceop than from any other way," he said. "The risks of allowing this kind of vigilante behaviour to continue are immense. It is hugely risky for the child, and other children who may be being abused by the same person, to do anything else."