The two men, working for Kingdom Security under contract with Wolverhampton council, ordered Nick J. Townsend to pay up after he supposedly dropped a Rizla paper when rolling a cigarette outside the train station.
But musician Nick had no idea what they were talking about, and after speaking to police and the city council, the fine was dropped.
Nick, from Stourbridge, then obtained the footage of the dispute and posted it online, where it's since received over 11,000 views, 72 shares and 180 comments.
He said of the incident: "They were really in my face. I use that train station quite a lot, I'm normally there a couple of times a week.
"I couldn't have been out of the train station for more than 20 seconds. They said they'd seen me drop litter and it was a criminal offence. They tried to give me a fine."
Government guidelines state fixed penalty notices should not be issued for accidental littering or if there is no evidence of intent to drop litter. They also state offenders should be given chance to pick litter up first.
"I just said, what did I drop? I didn't know if I even had dropped anything.
"They didn't ask me to pick it up or anything, they just tried to give me the fine. They were just throwing money figures at me, saying it's a fixed penalty notice of £75 and up to £2,000 if I don't pay. They claimed they were trying to keep Wolverhampton clean. If that's the case, why didn't they pick it up or ask me to pick it up? I think it's just a money making exercise.
Under data protection laws, Nick was entitled to a copy of the footage, which he uploaded to his Facebook page.
He said: "I had to pay £10 for the footage, but I thought I ought to get it. I put it out there on Facebook and it's gone a bit mad.
"I've had people commenting and sharing from all over the country, I didn't expect it to have the reaction that it's had.
"I could have been a tourist or someone just coming for the day, it doesn't send a good message out for Wolverhampton."
Paviter Singh, a spokesman for Kingdom, said: "The gentleman was issued with a fixed penalty notice by a junior officer who was undergoing training.
"The officer made a mistake and should not have issued a penalty on this occasion because he was unable to identify what he believed he witnessed being dropped onto the floor.
"The gentleman was told at the time of the incident that he was able to make representations if he felt the penalty had been served in error.
"He did make representations and the case was reviewed. Following this review, the penalty notice was cancelled once it became clear the officer had made a mistake.
"The officer was spoken to about the incident. We are sorry that Mr Townsend was given a penalty in error, but the fact that his request for his case to be reviewed resulted in the fine being cancelled demonstrates the fairness of our procedures."
Tim Clark, a spokesman for City of Wolverhampton Council, said: "Our litter enforcement action has been enthusiastically welcomed by the public who consistently tell us that litter is a top priority for us to tackle. Complaints about litter enforcement are very low and incidents of littering are reducing as a result of the penalties. The vast majority of penalties issued by Kingdom are paid straight away and less than two per cent are contested."