Mobile providers need to stop putting customers on hold and answer the call to end charging people for phones they already own
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.”
Notes to editors
- More than 1 in 3 consumers go beyond their minimum contract period. Citizens Advice analysis focused on customers of providers who don’t offer split contracts, leaving 4 million people who were charged for a handset they’d already paid for. On average they spend 6 months after their contract ends and pay on average £22 a month. This means that customers overpaid by £490 million on their last mobile phone contracts alone.
- An online survey of 3,030 adults in Great Britain conducted by ComRes for Citizens Advice, 18-25 July 2018.
- Analysis conducted by Citizens Advice of over 700 different phone tariffs conducted in August 2017. We examined pay monthly handset-inclusive contracts offered by EE, Three and Vodafone across 12 handsets, and compared it to SIM-only tariffs offered by each provider. The difference between the 2 monthly charges is the monthly loyalty penalty customers pay after their fixed term period ends, unless they move to a cheaper deal. Both Android and iPhone devices were included in the analysis, and the handsets included in the analysis included a spread of recommended retail prices (RRP) - 3 ‘low-range’ handsets (RRP under £300), 5 ‘mid-range’ handsets (RRP £300-£600, and 4 ‘high-range’ handsets (RRP of over £600).
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