MILLIONS of Brits could be owed £1,823 in compensation from four major mobile firms over “rip-off” charges.
Those who’ve taken out contracts with Vodafone, EE, Three and O2 could be affected, according to a new class action lawsuit
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Consumer champion and former Citizens Advice executive, Justin Gutmann claims that millions of customers at these telecom firms have fallen victim to the “loyalty penalty”.
In this case, the term is used to refer to customers who carried on paying for their handset cost after their original contract expired.
The same phrase can also be used to refer to firms offering cheaper deals to newbies while hiking prices for existing customers.
Mr Gutmann and the law firm Charles Lyndon announced on Thursday (December 7) that class action proceedings have been launched against the four mobile networks.
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These legal cases aim to chase compensation for millions of customers that companies have let down.
Under the cases, one person takes a company to court on behalf of consumers.
The lawsuits have long been popular in the US but until recently didn’t happen in the UK.
The Consumer Rights Act 2015 changed all that and 2023 has already seen many major cases progressing.
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Mr Gutmann alleges the mobile operators have overcharged five million customers on up to 28.2million contracts since January 2007.
As a result, the class action is seeking damages of at least £3.285 billion.
If successful, someone who held a contract with just one of the mobile operators could receive as much as £1,823.
However many consumers are expected to have claims against more than one mobile operator and so could receive even more compensation.
If the compensation is distributed evenly, contract holders from the mobile network operators listed below are estimated to receive the following amounts:
- Vodafone – up to £1,823
- EE – up to £1,101
- Three – up to £1,817
- O2 – up to £1,178
The Sun understands that these amounts are calculated after taking into account legal fees.
The loyalty penalty claim is being brought on behalf of customers who have purchased mobile contracts including handset costs and airtime services such as data, minutes and calls.
When these contracts are agreed upon, their price during the minimum contract term includes both the mobile and the use of airtime services.
However the loyalty penalty claim alleges that the mobile network operators failed to reduce the amount charged once the minimum contractual term expired, even though consumers had already paid for their mobiles.
This resulted in existing customers being charged more than a new customers on a sim-only deal.
Most customers of these mobile network operators who made payments after the expiry of their contractual minimum term are included in the loyalty penalty claim, which is being conducted on an “opt-out” basis.
This means all qualifying consumers will be automatically included in the claim for free unless they follow specific steps to opt-out.
Justin Gutmann said: “I’m launching this class action because I believe these four mobile phone companies have systematically exploited millions of loyal customers across the UK through loyalty penalties.
To learn more or to opt out of the loyalty penalty claim class action, visit www.loyaltypenaltyclaim.com.
He added: “Sun readers should think back and ask themselves if they’ve bought a phone and SIM contract from one of these four companies?”
“If they have, go to the website and find out more about it, because you might be due compensation.
“The amount we’re talking about is not an insignificant amount of money.
“It’s your hard-earned cash and we believe you deserve to get it back.”
It’s worth noting that legal cases can take time to process and there’s no guarantee you could be entitled to a payout.
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.”
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.”
A spokesperson for Vodafone said: “This has just been brought to our attention and we don’t yet have sufficient detail for our legal team to assess.”
How can I beat the loyalty penalty?
The simplest way to beat the loyalty penalty is by simply switching your mobile contract when it expires.
If you’re outside the minimum term of your contract then you won’t need to pay a cancellation fee – and you might be able to find a cheaper deal elsewhere.
If you’re still in your contract period, you might be charged an exit fee.
But don’t just switch contracts because the price is cheaper than what you’re currently paying.
Take a look at how many minutes and texts, as well as how much data you’re using, to find out which deal is best for you.
Use comparison websites, such as MoneySupermarket and Uswitch to compare the best tarrifs and phone prices.
If you’re happy with your provider then it might be worth using your research to haggle a better deal too.
What are class action lawsuits?
Lawsuits that result in compensation for many people are often referred to as “class action”.
In England and Wales, a Group Litigation Order (GLO) is often used for this kind of lawsuit.
Collective action has been made easier under the UK’s Consumer Rights Act 2015.
It means the courts can treat similar claims as one, rather than having hundreds or even thousands of separate individual claims.
There are a number of stages to bringing this kind of lawsuit, including the courts needing to give permission for a GLO.
Both sides can also appeal decisions at various stages making it a lengthy process with no guarantee of a payout.
Collective actions are rare – there have only been around 100 cases since 2000 according to the HM Courts and Tribunals Service.
The Mastercard case was the first of these big claims since the changes in 2015 and is the furthest along – but it first launched in 2017 and is still in the courts.
Lawyers have urged Brits to join several other collective claims for compensation in recent years.
There is no cost to sign up, but the firm will usually take a cut of any payout if the claim is successful to cover legal costs and that can be as much as 30%.
There’s no guarantee of a payout and collective claims of this type have not yet been fully tested in court.
None have yet been given permission to go ahead as a collective action apart form the Mastercard claim.
Millions of Easyjet customers who had their personal details stolen in a data breach could make a claim for compensation.
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British Airways, Virgin Media, and Equifax are also the subject of collective claims after data breaches.
Most recently, The Sun revealed that Brits ripped-off in the PPI scandal launched a new legal claim that could cost the banks up to £18billion.
