Contract customers charged for phones they have paid for says report
Industry figures back Citizens Advice’s call for operators to ramp up contract transparency after research revealed monthly customers overpaid by almost half a billion pounds.
Research from Citizens Advice released last week revealed an estimated four million monthly contract customers have been charged for phones they already own, paying a total of almost half a billion pounds (£490m). On average, customers were overpaying £22 per month each.
EE, Three and Vodafone “routinely charge customers extra for their handsets after they have been paid off”, according to Citizens Advice.
Citizens Advice boss Gillian Guy said the practice is “unacceptable”.
She also said: “We need action. Other companies have already stopped doing this so we’re looking for these three major providers to follow suit.”
uSwitch.com mobiles expert Ernest Doku says: “Citizens Advice is right to call for more transparency in how much mobile users pay for their contracts, but championing tariffs that split the cost of the phone and the service still risks seeing consumers paying considerably more than they should for their airtime.
“For flexi tariffs, providers charge a premium for these deals – up to 38 per cent extra meaning that consumers could end up paying £231 million more than they should on the airtime part of the deal alone.”
O2 already automatically cuts monthly charges after a contract has ended, continuing to charge for the airtime – data, minutes and text. At the time of writing O2 was charging £20 per month for a SIM-only contract with 20GB data, unlimited minutes and text.
The same tariff on an iPhone XS on a 24 month contract is £74.75 – £29 for the tariff. Carphone Warehouse commercial marketing director Carl Doran says customers get complacent due to the daunting plethora of choice.
“Shockingly, our research shows more than one in three of us who have already paid for their phone have no plans to do anything about it”, he said.
Compare the Market head of mobile Rohit Makol said the revelation was “shocking” and “exploitive”.
He said: “the Citizens Advice’s investigation should ring alarm bells for customers to review their contract”.
O2 chief marketing officer Nina Bibby, said: “Charging for phones that have already been paid off damages customer trust and the reputation of the industry.”
EE said the splitting idea is “overly simplistic and doesn’t give the customers either the transparency or best deal that they deserve.”
“We agree that customers shouldn’t overpay, but we believe that this is best achieved through clear communications with consumers about their options.” EE said it sends alerts before the end of customers’ contracts to explain options.
A Three spokesperson said: “We make the length of any contract clear to new customers and make this information available at all times.”
Three said it was working on the issue of handset subsidiy with the government and regulators.
Vodafone said: “We contact all customers when they are approaching the end of their minimum term to let them know their options. These include upgrading or moving to a SIM-only contract”
Vodafone said it will give extra data to those customers but stay on their contract after the end of their minimum term.