- By Sam Gruet
- Business correspondent, BBC News
Millions of UK consumers could receive a payout after a legal claim was brought against a mobile phone network.
Consumer champion Justin Gutmann accused Vodafone, EE, Three and O2 of overcharging customers for phones at the end of their contracts.
He is seeking more than £3 billion in damages on behalf of 4.8 million people.
In response, EE called the claim “speculative”, while O2 said it had not been contacted.
Vodafone said it did not have enough details for its legal team to assess and Three declined to comment.
The “loyalty claim” – which is being submitted to the Competition Appeal Tribunal – is being brought on behalf of consumers who bought contracts that included mobile phones and services such as data. data, call minutes and messages.
Mr Gutmann, a former director of Citizens Advice, estimates that 28.2 million mobile phone contracts in the UK could be affected since 2007.
He estimates that if the claim is successful, someone with a contract with just one of the mobile operators could receive more than £1,800.
Mr Gutmann said when contracts are initially agreed, costs are reimbursed over the minimum term of the contract – typically 24 months – including mobile costs and usage of the service.
He alleges that the UK’s four largest network operators and their parent companies have failed to reduce the amount they charge customers after the minimum contract period ends – despite the fact that consumers users have paid for their mobile phones.
This means existing customers are charged for something they have already paid for and they are charged more than new customers, such as Sim-only transactions, he added.
“If our request is successful, it will finally stop these companies from taking advantage of their loyal customers and stop the unethical practice of punishing loyalty,” Mr. Gutmann said.
According to Mr. Gutmann, it is an opt-out claim, meaning eligible consumers will automatically be included in the claim for free unless they follow specific steps to opt-out.
An EE spokesperson said the company “strongly disagrees with the speculative claims against us”.
A spokesperson said: “EE offers a range of tariffs and robust processes for dealing with end-of-contract notices. The UK mobile market is a highly competitive space with some of the lowest prices across Europe”.
Vodafone told the BBC: “We have just been informed of this matter and we do not yet have enough details for our legal team to assess.”
A spokesperson for O2 said to date “there has been no contact with our legal team regarding this claim”.
The spokesperson added: “However, we are proud to have been the first supplier to introduce split contracts a decade ago, which completely and automatically reduces customers’ bills once they have paid ran out of my phone number.”
The company said it has been campaigning on the issue since May and called on other operators to introduce changes that would prevent consumers from paying too much for smartphones they already own.
That’s what Jack Drury, 27, from St Albans, experienced earlier this year.
He told the BBC he was “delighted” with the announcement.
“For many of us, a monthly fee is the most affordable way to access technology,” he said. However, it needs to be clear what proportion of that fee goes to pay for a device and how much goes to pay for mobile services.”
How to check if your phone is out of contract
- Since February 2019, suppliers must contact customers by letter, email or text to warn that their contract is ending.
- They don’t need to tell you the cheapest deal available to switch to, so you should contact your supplier or shop around for the cheapest deal.
- If you’re not sure when your policy expires, you can text the word INFO to 85075 at any time. Within minutes, you will receive a reply letting you know when your contract expires and what any early termination fees will be.
This is not the first time the problem of existing UK customers paying too much has been in the spotlight.
In September 2018, Citizens Advice lodged a complaint with the Competition and Markets Authority (CMA), raising concerns that long-standing customers were paying more than new customers for contracts. mobile coins, as well as broadband, cash savings, home insurance and mortgages.
CMA investigate and found the “loyalty penalty” to be a serious problem affecting millions of people, including those least able to pay.
In 2020, new Ofcom regulations were introduced requiring companies to let mobile and broadband customers know when contracts end and whether better deals are available.
Last year, the watchdog said that since the new regulations were introduced, the number of out-of-contract broadband customers had fallen by more than a million.
As of June 17, 2022, it said suppliers need to provide customers with a contract summary before they can agree to enter into a contract.
This year, Vodafone and Three announced they had reached an agreement to merge and create the UK’s largest mobile phone service provider with around 27 million customers.
Representatives of the companies told MPs that their planned merger would not increase prices, although it would reduce the number of competitors in the mobile market.
It is unknown how long the claim may take to go to court. Mr Gutmann has previously represented UK consumers in legal cases against UK train operators and Apple.
Mr Gutmann filed a lawsuit against Apple – unrelated to claims against mobile network providers – in June 2022. The case was decided by a UK court last month.
He said disputes of this size often take several years to resolve.