Millions charged too much for mobiles

Rip-off contracts mean customers are still billed for phones they have already paid for

MOBILE phone users are being routinely overcharged by the UK’S biggest providers, telecoms watchdogs and consumer groups warn today.

At least six million loyal mobile phone contract holders are being charged for handsets for which they have already paid in full.

Customers are unaware they are being charged for the handsets when their fixed-term contracts end, as providers do not tell them they have met the cost of the device and only need to continue paying for calls, texts and data.

Citizens Advice has called on three of the four largest mobile phone providers, Vodafone, EE and Three, to stop the practice. The regulator Ofcom backed Citizens Advice’s concerns and hinted it could take action next year.

Last night the Government also called for changes by mobile phone providers.

Matt Hancock, the minister for digital, said: “It’s only right that mobile customers should be notified when they have paid off the price of their handset, and that their future bills should reflect this. I welcome Citizens Advice’s call for better billing information for consumers, and hope that providers will now take the initiative by clearly separating the cost of handsets and tariffs in mobile contracts.”

One in three customers on “hand set inclusive” mobile phone contracts continues to pay beyond the minimum term of their contract, research by Citizens Advice found.

However, while some providers will reduce the cost of the monthly fee automatically after the handset has effectively been paid off, others do not.

On average, those customers pay an extra £22 a month which rises to £38 for high-end smartphones. One in five customers only realises after six months, by which time they will be £228 worse off.

At present there are no rules forcing providers to lower monthly fees to “sim only” rates which reflect the fact that the original phone has been paid for. An Ofcom spokesman said: “We share Citizens Advice’s concern that some mobile customers who purchase a handset bundled with their service plan continue to pay the full monthly charge after their minimum contract term ends.

“We’re already considering this issue as part of a wider project to help people shop around and secure the right deals, and expect to announce any next steps in spring next year.”

Citizens Advice said the networks were overcharging loyal customers by £22 a month, on average.

Those customers with hi-tech handsets such as the iphone 7, the Galaxy S8 or Xperia XZ Premium are paying up to £38 a month after their contracts have ended. Customers with the iphone8 256GB model could be paying up to £46 a month extra.

Someone with a 24-month Vodafone contract for an iphone 8 would pay £30 upfront towards the phone, and then £54 a month – valuing the phone at £726. By remaining on the contract after it ends, the customer’s bill should drop to £25 a month – the cost of the equivalent “sim-only” contract.

The study found that the over-65s were the most likely to be caught out, with 23 per cent of phone customers from this age group on a handset-inclusive deal remaining on it for more than 12 months past the end of the fixed contract. This compared with 13 per cent of under-65s.

A Three spokesman said: “Whenever a customer signs with us, we make the end date of the contract term very clear. We encourage all Three customers to contact us if they would like to change their plan at the end of their fixed-term deal. They can also check how much time they have left via our app.”

A Vodafone UK spokesman said: “Wherever possible, we contact customers nearing the end of their contract to offer them a range of options.” EE said: “We send our customers regular updates about their options before and after they reach the end of their contract.”