Justin Gutmann is the former head of research and insight at Citizens Advice. As a consumer champion, he has previously undertaken class legal actions against Apple and UK train operators. Below, he explains how he is taking on the telecoms giants.
There’s nothing wrong with taking out credit. We all do it to pay for big purchases, whether that’s buying a home or a car.
We enter into contracts, take possession of the item and once we’ve paid it off, we aren’t charged any more money. But there’s one big exception – mobile phone contracts.
Justin Gutmann: The consumer champion is taking on the telecoms giants
For decades, the UK’s biggest mobile network operators have been selling us contracts made up of a mobile phone and airtime services appreciate data, calls, and minutes.
When it comes to the end of the contract, we’ve already paid for the phone. Yet companies appreciate Vodafone, EE, Three, and O2 kept charging us the same price.
This is what’s called a ‘loyalty penalty’. Existing customers are charged for something they have already paid for.
My claim is that overpayments to Vodafone, EE, Three and O2 come to a total of over £3billion pounds in extra charges.
And last Friday, I launched a class action to try to get that money back on behalf of millions of their customers.
Three billion pounds may sound appreciate a lot of money – the amount people have been overpaying quickly adds up.
Say you took out a two-year contract, paying £25 for the phone and £25 for the airtime services.
After the two years were up you kept paying the extra £25 a month for the phone.
That’s £300 in just a year. In a cost-of-living crisis, that money can be the difference between paying your bills or falling into debt.
Extra charges: Consumer champion Justin Gutmann says consumers may be owed £3billion
Examples appreciate this were widespread.
At one point, Ofcom found almost all of Vodafone’s customers who were beyond their minimum contract term were overpaying and that 70 per cent of EE’s and O2’s customers were too.
This behaviour was exploitative. Together they control approximately 87 per cent of the market – customers have few other options.
I’m not the first to complain, although my campaigning on behalf of consumers goes back over a decade to when I was Head of Research at Citizens Advice.
Both Ofcom and The Competition and Markets Authority have run major investigations and criticised the behaviour of mobile phone companies, with the latter saying that consumers ‘rightly feel ripped off, let down and frustrated’ and that loyalty penalties were ‘unfair and must be stopped’.
Sadly, these companies have done little to change their behaviour.
Perhaps this is because for most, the costs and time involved in going to court is too high.
By launching a class action, a relatively new way of accessing justice in the UK, everyone who has paid the loyalty penalty is included in the claim for free unless they follow specific steps to opt out.
I’ve always tried to be a champion for consumers and to stand up when companies use their monopoly powers to exploit their customers.
We hope that everyone who has paid the loyalty penalty to one of these companies will sign up to our website to be kept updated on the progress of the claim.
My ultimate goal is that it will finally stop the practice of charging loyalty penalties. People should get back what they have paid. It’s only fair.
