It is understood the company took over the car park for a period of about three weeks from the end of May to the start of June.
Euro Parking Services branded signage went up on the free-to-use small car park at the bottom of Dunnikier Road.
It currently operates the Coal Wynd car park across the road - but motorists using the company’s app to pay when they parked there found out they’d actually bought time in the free car park.
McTaggarts cafe in Aberdour to close
Major blaze at Kirkcaldy High Street store that was scene of cannabis raid
In pictures: The battle to tackle a fire at Kirkcaldy High Street store
Ross McLean: Police ‘growing concern’ over missing Glenrothes man
New bid to demolish ruinous farm building in Fife conservation village
And that meant some of them were hit with parking tickets.
Now Fife Council has confirmed it has investigated and is taking legal advice.
The situation was raised by David Torrance MSP who hit out at Euro Parking Service, branding the company as unscrupulous.He stepped in after a constituent was hit with a parking ticket despite using the free car park.
Retail worker, Marlene Berry, took her case to the MSP’s office after getting the ticket.
Mr Torance said there were at at least three people issued with parking tickets.
Mrs Berry regularly uses Coal Wynd car, and pays through the RingGo app on her phone.
Her problems started when she mistakenly paid for the adjacent car park on Dunnikier Road as it was named on the app as Coal Wynd.
Mr Torrance, said: “After corresponding with Fife Council, its officers have told me that Euro Parking Services had taken over the free car park on Dunnikier Road for a period of about three weeks from the end of May to the start of June.
“Not only have Euro Parking Services removed the Fife Council signage before erecting its own, but the private parking company also labelled the Dunnikier Road car park as the Coal Wynd car park on the RingGo payment app – meaning that several people have been issued with PCNs as they thought that they were paying for parking in the Coal Wynd car park.”
Mr Torrance also criticised Fife Council for refusing to initially tear up the tickets, and said she had been treated “ treated unfairly.”
The local authority confirmed this week it had decided to cancel the parking tickets given the unusual circumstances.
Susan Keenlyside, sustainable travel and parking service manager, said: "We have investigated the events surrounding this and we are now taking legal advice.
"As soon as we became aware of the matter, we raised it with Euro Parking Services and RingGo to stop any further payments being made by motorists.
“However, as a result of the two adjacent car parks appearing in RingGo with very similar names a small number of Penalty Charge Notices (PCNs) were issued.
"Due to the confusion in this exceptional case, we're arranging for these PCNs to be cancelled."
Euro Parking Services offers parking enforcement management and consultation to clients across the UK.
These include shopping centres and major businesses. It has a head office in Birmingham.
The company has been contacted for comment.