Regulator Ofgem said the failings of doorstep and telesales staff meant customers were not able to make informed decisions on whether to switch suppliers.
The company remedied the shortcomings by September 2012 but has agreed to make a payment of at least £25 to each of its customers who receive the Warm Home Discount.
Ofgem said npower gained insufficient information about a customer's consumption to enable them to decide whether to switch. It also failed to ensure that comparisons between the price of npower's supply and that of the customer's current supplier were always based on the tariff that customers were on.
Npower will write to customers affected by the breaches before assessing whether they are entitled to compensation.
Paul Massara, npower's chief executive, said: "It's good to draw a line under this, so we can focus on our goal of becoming number one for customer experience by the end of 2015."
Ofgem's investigation started in August 2010 and relates to activities that took place between October 2009 and July 2012.
Earlier this month, npower wrote to customers apologising for what was described by Ofgem as a "serious deterioration" in customer service levels.
The German-owned energy giant admitted that a number of bills and statements had not gone out on time, while some direct debit payments were not set up properly.