Mobile phone customers of EE, O2, Three and Vodafone could win £3bn compensation for ‘overcharging’

Millions of mobile phone users could be owed £3billion after years of being overcharged on their contracts, a former Citizen’s Advice executive has warned.

Customers could receive an average of £1,800 in compensation from Vodafone, EE, Three and O2, after a legal challenge was mounted yesterday against the UK’s four largest mobile phone network operators.

Consumer champion and former Citizens Advice executive, Justin Gutmann, who has launched the legal action, estimates that these companies have overcharged customers on up to 28.2million contracts and is seeking damages of £3.3billion.

Many are expected to have claims against more than one mobile operator and so could receive even more compensation, he says.

Take it EEasy: EE is one of the mobile phone firms facing a legal challenge for allegedly overcharging customers

Alongside law firm Charles Lyndon, Gutmann claims that phone providers have been ‘abusing their dominant positions in the UK mobile industry by charging a loyalty penalty’, in which long standing customers were overcharged for handsets beyond the end of their contracts.

This applies to anyone who purchased mobile contracts made up of a mobile phone and airtime services such as data, minutes and calls. 

When these contracts are agreed, their price during the minimum term of the contract includes both the mobile and the use of airtime services.

An industry insider told This is Money’s sister title, the Mail on Sunday, that the legal action could ‘open the floodgates to many more claims against loyalty penalty pricing’, including against insurers.

Gutmann says mobile network operators have failed to reduce the amount charged once the minimum contractual term expired, despite the fact that consumers had already paid for their mobiles. This means customers could have been charged more than a new customer if they were just paying for airtime services.

He says: ‘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 – taking over £3billion 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.’

All qualifying consumers will be automatically included in the claim for free unless they follow specific steps to opt out. You can find more information online here.

An O2 spokesman said: ‘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.’

Vodafone said: ‘This has just been brought to our attention and we don’t yet have sufficient detail for our legal team to assess.’

A spokesman for EE 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.’

Three has been approached for comment.

This post first appeared on Dailymail.co.uk