The online discount code was originally meant to be supplied to a small number of specific customers, but was distributed through chat rooms and consumer-saving websites, resulting in around 3,000 customers claiming a discount they were not eligible for.
initially honoured the discounts to all online shoppers who cited the code, before realising they were ineligible.
A spokesman for Littlewoods, said: "In accordance with clause 2.3 of our online terms and conditions we have re-charged the discount back to their accounts and have written to them individually to explain.
"We have informed Trading Standards in Liverpool who are satisfied with our actions. In addition, we are looking at a number of ways of ensuring this doesn't happen again."
James Gosnold, a customer who was forced to pay the £25 back, told the BBC that the situation had important implications for online trading standards.
He said: "Can you imagine buying something in a sale at a high street shop only to discover two months later that the sale price didn't apply to you? And that you didn't have the option to return the goods?
"Only they know how many thousands of orders this generated that most definitely would not have otherwise been placed."