The great mobile phone rip-off: Millions still being billed for handsets they have already bought

Three out of the four major mobile phone providers stand accused of overcharging customers by telecoms watchdogs
Three out of the four major mobile phone providers stand accused of overcharging customers by telecoms watchdogs

Mobile phone users are being routinely overcharged by the UK's biggest providers, telecoms watchdogs and consumer bodies have warned. At least six million loyal mobile phone contract holders are being charged for mobile phones they have already paid for.

Customers are unaware they are being charged for handsets after their contracts have ended, as providers do not tell them they have finished paying off the cost of the phone 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 Citizen's Advice's concerns and hinted it could take action next year. 

The Government also called for changes by mobile phone providers.

Minister for Digital, Matt Hancock 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 'handset-inclusive' mobile phone contracts continue to pay beyond the minimum term of their contract, research by Citizens Advice found. 

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

On average, those customers pay an unnecessary £22 a month which rises to £38 extra for smartphones. One in five customers only realise 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.

But in a sign that a major crackdown to end the practice could come next year, telecoms regulator 

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 an average £22 a month. 

Those with hi-tech handsets like the iPhone 7, the Galaxy S8 or Xperia XZ Premium are paying up to £38 a month after their contracts have ended. Those with the iPhone8 256 GB model could be paying up to £46 a month extra. 

For example someone with a 24-month Vodafone contract on 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 should see their bill drop to £25 a month - roughly the cost of an equivalent "sim-only" contract.

The study found that those aged over 65 were the most likely to be caught out, with 23 per cent of 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 to 13 per cent of under-65s.

A Three spokeswoman said: "Whenever a new 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 on their plan via the My3 app.

A Vodafone UK spokeswoman 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."

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