New research from Citizens Advice reveals an estimated 4 million people in the UK have been charged for phones they already own, paying a total of £490 million extra on their last contracts.
Three of Britain’s biggest mobile phone networks – EE, Three and Vodafone – routinely charge customers extra for their handsets after they have been paid off.
Customers are often unaware they are being charged for handsets after their contracts have ended, even though they own the phone and only need to continue paying for calls, texts and data.
Citizens Advice is calling on these companies to make the pricing of mobile services and phones more transparent by separating out the cost of mobile service and the phone – something that other providers already do. Bundled deals, without any information on the effective cost of the phone, are the most common type of mobile contract and typically last 2 years.
Citizens Advice research found:
From analysis of over 700 different bundled contracts, consumers would pay more in almost 3 out of 4 (73%) of cases than buying a phone outright.
Bundled mobile contracts confuse consumers, with most (55%) assuming it is the cheaper option.
On average customers are overcharged £22 a month, but this could be as high as £38 for high-end phones such as an iPhone 7 or Samsung Galaxy.
Vulnerable people are more at risk of being overcharged. Older people are twice as likely to be charged for a phone they already own longer than 12 months, which could cost them on average £264.
During a Westminster Hall debate earlier this year, Digital Economy Minister Margot James said no one should continue to pay for a product that they have already paid off. Ofcom is currently consulting on how to address this problem, but Citizens Advice says their proposal of sending a single notification to customers before their contract ends doesn’t go far enough to help consumers.
Gillian Guy, Chief Executive of Citizens Advice, said “It is unacceptable that mobile providers are knowingly overcharging customers for phones they already own. 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. In the meantime, consumers should check their phone bills to see if they can save money with a SIM-only contract or upgrade to a new phone.”
Rohit Makol, Head of Mobile at Compare the Market, said “Mobiles are a key part of everyday life for millions of people of all ages. The fact that four million people have been overcharged for phones they already own is shocking and, at worst, exploitative. Citizens Advice’s investigation should be ringing alarm bells for any EE, Three or Vodafone customer to review their contract and switch if they’re out of their contract and overpaying. Mobile phone customers can save money by changing providers or reviewing their tariff. This is likely to be a significant amount if you are being wrongly charged for a handset that has already been paid off when your contract ended.”