Britain’s biggest mobile phone network providers are facing a class action claim alleging that loyal consumers are being overcharged.
Consumer champion and former Citizens Advice executive Justin Gutmann is bringing the Loyalty Penalty Claim against Vodafone, EE, O2 and Three.
The legal action alleges that customers who have bought contracts covering a handset as well as data, minutes and calls are paying over the odds after the minimum term expires.
The Loyalty Penalty Claim says providers charge customers to pay for their handset during the minimum term, but alleges many customers carry on paying the same rate once this has been paid off if they stay loyal to the network.
Ms Gutmann claims that customers are punished for their loyalty when the networks do not decrease prices following the completion of the minimum term.
The case follows a Citizens Advice “super complaint” issued to the Competition and Markets Authority (CMA) and if the lawsuit is successful, consumers who have held a contract with just one of the providers could get £1,823 refunded.
Mr Guttman said: “I’m launching this class action because I believe these four mobile phone companies have systematically exploited millions of loyal customers across the UK through loyalty penalties – taking over £3 billion out of the pockets of hard working people and their families.
“These companies kept taking advantage of customers despite the financial crisis of 2008, Covid and now the cost of living crisis. It’s time they were held to account.”
He added: “If our claim is successful, it will finally stop these firms from taking advantage of their loyal customers and stop the immoral practice of loyalty penalties.”
The Loyalty Penalty Scheme alleges that new customers on a SIM-only deal are paying less than customers who have stayed loyal to the provider from whom they bought a handset.
Following the Citizens Advice super complaint back in 2018, the CMA said: “We do not consider that providers should continue to charge customers the same rate once they have effectively paid off their handsets at the end of the minimum contract period. This is unfair and must be stopped.”
The regulator added that mobile phone customers “rightly feel ripped off, let down and frustrated” at the amount they ended up paying providers.
convey.co.uk has approached Vodafone, EE, O2 and Three for comment.
An O2 spokesperson said: “To date there has been no contact with our legal team on this claim. However, we are proud to have been the first provider to have launched split contracts a decade ago which automatically and fully reduce customers’ bills once they’ve paid off their handset.
“We’ve long been calling for an end to the ‘smartphone swindle’ and for other mobile operators to stop the pernicious practice of charging their customers for phones they already own.”
