Millions of mobile customers could get £1,800 in claim against phone giants

Major UK mobile phone companies face a £3.3bn legal damages claim after allegations they overcharged five million existing customers over a 16-year period.

Justin Gutmann, consumer champion and former Citizens Advice executive, has brought a class action legal case against the four largest mobile phone network operators Vodafone, EE, Three, and O2 , and their owners.

The new legal claim class targets the mobile network operators’ practice of charging “loyalty penalties” – charging existing customers more than new customers for the same services.

The legal action, brought by Mr Gutmann and the law firm Charles Lyndon, are seeking damages of at least £3.28bn. If they win affected consumers could receive as much as £1,823 each, Mr Gutmann said. Some customers may have more than one contract with mobile operators

Mobile customers who bought contracts made up of a mobile phone and airtime services such as data, minutes and calls could be entitled to compensation. When the contracts are agreed, their price during the minimum term of the contract includes both the mobile and the use of airtime services.

The legal case alleges mobile network operators did not reduce the amount charged once the minimum contractual term expired, despite the fact that consumers had already paid for their mobiles. This resulted in existing customers being charged more than a new customer would be if they were just paying for airtime services.

Somebody signing up for a two-year contract combining a phone and a SIM airtime services deal, paid off their mobile phone during the course of their contract, but then continued to be charged the same amount once the minimum contract term had expired, resulting in customers paying far more than they would if they were a new customer on a SIM-only deal.

The case follows a rare super-complaint from Citizens Advice to the regulatory Competition and Markets Authority (CMA) in 2018.

The CMA found that: “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.” They said customers “rightly feel ripped off, let down and frustrated”.

Justin Gutmann said: “I believe these four mobile phone companies have systematically exploited millions of loyal customers across the UK through loyalty penalties – taking over £3bn 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.”

Justin 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.”

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.” Operator EE said the firm “strongly disagree with the speculative claim being brought against us”.

An EE spokesperson said “ We strongly disagree with the speculative claim being brought against us. EE offers a range of tariffs and a robust process for dealing with end of contract notifications.  The UK mobile market is highly competitive space with some of the lowest pricing across Europe.”

Other mobile operators have been contacted for comment.