Citizens Advice urges Ofcom to act after finding Vodafone, EE and Three charge for handsets after phones paid off
Three of Britain’s biggest mobile phone networks keep charging customers extra for their handsets after they have been paid off, leaving them up to £38 a month worse off, a consumer group has said.
Citizens Advice found that Vodafone, EE and Three were overcharging customers who failed to change their contract an average of £22 a month, rising to £38 a month for buyers of premium phones including the Samsung Galaxy S8, Apple iPhone and Sony Xperia XZ Premium.
Raising concerns that older customers were being stung by “sharp practices”, it called for intervention from the regulator Ofcom if mobile networks failed to be clear about how contracts are structured and cut bills once phones are paid off.
“Mobile phones are now an essential part of modern life, but the way that the cost of handsets are hidden within some contracts gives phone providers a way to exploit their customers,” said Gillian Guy, the chief executive of Citizens Advice.
Many contracts are paid monthly over two years and cover the cost of the customer’s phones, which can be hundreds of pounds to buy outright. At the end of the contract, the customer owns the handset and is free to stay on the contract or switch.
However, Citizens Advice research found that Vodafone, EE and Three continued charging customers the same amount as when they were paying for the handset.
In the worst case, customers with a 256GB iPhone could end up being overcharged by £46 a month on average, it said.
Over-65s were the most likely to be caught out, with 23% on a handset-inclusive deal remaining on it for more than 12 months past the end of the fixed contract, compared with 13% of under-65s.
Overall, 36% of people with a handset-inclusive mobile phone contract stayed on it beyond the fixed period, with 19% staying in the same contract for more than six months afterwards.
Citizens Advice called on all providers to reduce their customers’ bills when they stay in the same contract past the end of a fixed deal to reflect the expired cost of the handset.
Guy added: “It is clearly unfair that some phone providers are charging loyal customers for handsets that they have already paid for. It’s especially concerning that older customers are more likely to be stung by this sharp practice.”
A Three spokeswoman said contract end-dates were made clear to new customers, who were encouraged to get in touch if they wanted to change their plan.
A Vodafone spokeswoman said workers contacted customers near the ends of their contracts “wherever possible”.
EE said separating phone and tariff sometimes left customers worse off, adding that most choose upgrades or a SIM-only plan when their contracts expire.
Nina Bibby, chief marketing officer of O2, accused rivals of undermining trust and reputation in the mobile phone industry, and said the provider separated device and service charges in monthly bills: “We’d like to see the other operators review their position and follow our lead.”