Four million mobile phone customers are being charged for handsets they already own, losing an average of £22 per month, according to research from consumer watchdog Citizens Advice.
Three of the UK’s largest mobile networks, EE, Three, and Vodafone, continue to charge customers for their devices after their contracts have expired and the handsets have been paid off. 36% of all mobile customers fail to change tariffs after their contract ends.
Vulnerable people are more likely to be ripped off, with older customers twice as likely to be charged for a phone they’ve already owned for longer than 12 months, losing an average of £264.
Customers were overcharged by an average of £22 per month, but the average figure could be as high as £38 for high-end phones including the Apple iPhone and Samsung Galaxy. Citizens Advice calculated that customers with a 256GB iPhone 8 could be paying £46 too much a month.
To avoid being overcharged, customers should be aware of the expiry date of their contract and ask their network to switch them to a cheaper, SIM-only deal or switch to another provider and contract at that point.
On the whole, consumers are unwittingly paying £500m each year paying for handsets they already own.
Gillian Guy, chief executive of Citizens Advice, called the practice “unacceptable.”
“Some of the largest mobile phone providers are routinely overcharging their loyal customers,” she said. “It’s especially concerning that older customers are more likely to be stung by this sharp practice.”
“Mobile phones are now an essential part of modern life, but the way that the cost of handsets are hidden within some mobile phone contracts gives phone providers a way to exploit their customers,” she added.
Citizens Advice has urged providers to separate the cost of the handset from the cost of mobile services in advertisements and in bills given to customers, to make it clear when they have paid off the phone. The charity also wants mobile networks to automatically reduce customers’ bills when they stay on the same tariff past the end of the fixed deal, to reflect their device having been fully paid for.
Industry regulator Ofcom is currently consulting on plans to end the practice of networks overcharging consumers for mobile handsets and is due to publish the results of the consultation in March 2019.
“We share concerns about customers paying more than they need to. People are not being given the information they need about their contracts,” an Ofcom spokesperson said.
Ofcom has suggested that providers should be required to send customers notification when their minimum contract ends
However, Citizens Advice said Ofcom’s proposed regulations don’t go far enough.
“We’ve heard a lot of talk from government and the regulator but now we need action. Other companies have already stopped doing this so we’re looking for these three major providers to follow suit,” Guy said.
The mobile networks have pushed back against the cost splitting proposal and claim they do enough to notify consumers about the expiry of their contracts.
A spokesperson for Three said: “We make the length of any contract very clear to new customers and make this information available through our customer service channels at all times.”
Vodafone said: “We already contact all of our customers when they are approaching the end of their minimum term to let them know their options. These include upgrading their handset or moving to a SIM-only contract so they are not paying anything for a handset.”
O2 was exception among the main mobile networks in not charging customers for handsets past the end of their contract. O2 has split the cost of its mobile services and handsets since 2013.
“Charging for phones that have already been paid off does nothing but damage customer trust and the reputation of the industry,” said Nina Bibby, chief marketing officer for O2.
