The company that owns the harbour-side road at Porthleven in Cornwall said it had to paint the lines on a 197ft (60m) stretch of road to "calm" congestion.
Cornwall Council says the lines are "not legal", and "no enforcement can take place" by "anyone".
Several local business owners said it had caused drivers to park on the other side of the road, blocking entrances.
The Harbour and Dock Company admitted it had not been through any official process to paint the lines in the fishing village and they were unenforceable.
Phil Ward from the firm admitted the markings were "pointless in a sense", but insisted they had been successfully deterring many people from parking there.
"I don't see why there's an argument over it - there's no other harbour in Cornwall that you can park next to the harbour wall," he said.
A spokesperson for Cornwall Council said: "The newly painted yellow lines on Commercial Road in Porthleven are not legal, and have no legal standing and no enforcement can take place by official civil enforcement officers, the police, or anyone else."
Suzy Williams from Four Crows Gallery said the lines had just caused a new problem: "Everyone's now parking on the other side of the road and blocking the entrances to all the shops which is causing absolute chaos and obviously losing us business."
Other business owners on the road said the process had been "handled badly" and had "pushed the problem from one side of the road to the other".
Cornwall Council declined to say whether the company would be forced to remove the yellow lines.
Unauthorised double yellow lines at a popular tourist spot have been causing "absolute chaos," it has been claimed.