Strict "no touching" rules were broken at two Manchester strip clubs when dancers sat on customers' laps, a council investigation discovered.
The licensing breaches happened at Victoria's on Dantzic Street and Obsessions on Whitworth Street.
Both clubs have improved their CCTV systems and removed curtains from private booths following Manchester City Council's six-month investigation.
Neither business responded to the BBC or Local Democracy Reporting Service.
The council launched its inquiry after receiving a dossier and video footage from pressure group Not Buying It that suggested "sexual contact" with customers was happening at the clubs.
Not Buying It aims to raise awareness of the harm it says is caused by the porn and sex trade, and campaigns for change.
While looking into the venues - which offer "full, nude lap dances in 'discreet' private rooms" - the council said it also heard claims some performers had engaged in prostitution with punters.
But neither the local authority nor Greater Manchester Police found any evidence to support the prostitution allegations.
"In both instances the view was taken that 'sexual contact' was mainly limited to performers sitting on the laps of customers," said a council spokesperson.
The council's policy for sexual entertainment venues says there "should be no intentional physical contact" between performers and customers, except for leading customers by the hand to performance areas.
As a result of the breaches, the authority said it was putting in place a "far more stringent regime of oversight".
A "performance compliance officer" will be employed to view a sample of CCTV from each night, and both clubs have been told to upgrade CCTV systems and remove curtains from private booths.
A third party officer will also carry out monthly "secret shopper" style monitoring visits.
The Local Democracy Reporting Service said it understood both venues had implemented the rules but Not Buying It said they were "utterly meaningless".
However, Shiri Shalmy, of strippers' union United Voices of the World, said: "We suggest Not Buying It find other ways to fight for women's rights, starting by speaking to the women they claim to support."