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Vodafone, EE, Three Are Overcharging Customers By £38 A Month

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Loyal mobile customers are being overcharged when handset is paid off warns Citizen Advice

New analysis from Citizens Advice has warned that loyal mobile customers are being overcharged by network operators, sometimes by as much as £38 a month.

It found that three of the four largest mobile phone network providers continue to charge customers extra for a handset, even after this cost has been covered in their fixed deal.

The three allegedly guilty operators are Vodafone, EE and Three.

Handset Costs

According to Citizens Advice, customers who stay with on the same phone plan after the fixed deal ends do not get their bills reduced.

This, says Citizens Advice, means that customers are paying on average an extra £22 a month for a phone they have already paid off.

It says the extra cost of a handset, when bundled in with a mobile plan, can be as high as £38 a month on average for contracts with high-range handsets such as the iPhone 7 128/256GB, the Galaxy S8 and the Xperia XZ Premium.

And that extra gets even worse when the latest Apple handsets are factored in. Citizens Advice said that its separate analysis of the iPhone 8, found that customers with a 256GB model could end up being overcharged by £46 a month on average.

Of course, as the iPhone 8 was only released in September, there is no guarantee that this would still be the case when the average contract ends in two years.

The advice bureau pointed out that at the end of the fixed term deal people have the option to stay with their network on the same contract; take out a new contract; or move to another provider altogether.

The obvious advice would be for people to renegotiate their contract as soon as it expires, and move providers if necessary.

But as Citizens Advice found out, it is often people aged over-65 are most likely to be overcharged. It found that 23 percent of over 65s with a handset-inclusive mobile phone contract stayed in their contract for over 12 months past the end of the fixed deal period.

This is compared to just 13 percent of people aged under 65.

But overall, 36 percent of people with a handset-inclusive mobile phone contract stayed in the same contract after the end of their fixed deal period, with 19 percent staying in the same contract for over 6 months afterwards.

Citizens Advice is calling on all mobile operators to reduce their customers’ bills when they stay in the same contract past the end of a fixed deal, to reflect the cost of the handset being paid for.

And it should be made clear to the consumer in their contract when the handset cost is paid off. The charity wants operators to separate out the cost of a handset from the cost of mobile phone services.

‘Clearly Unfair’

“Some of the largest mobile phone providers are routinely overcharging their loyal customers,” said Gillian Guy, chief executive of Citizens Advice. “Mobile phones are now an essential part of modern life, but the way that the cost of handsets are hidden within some mobile phone contracts gives phone providers a way to exploit their customers.”

“It is clearly unfair that some phone providers are charging loyal customers for handsets that they have already paid for,” said Guy. “It’s especially concerning that older customers are more likely to be stung by this sharp practice.”

Guy said that operators must now make sure that any customers staying in a contract past the end of a fixed deal have their monthly bill reduced to reflect the cost of the handset.

“Providers could make it much easier for consumers to compare prices by separating out the cost of handsets from the cost of services like data and minutes for all contracts, that way it would be much clearer what they’re paying for,” said Guy. “It’s important that Ofcom and the government are prepared to protect consumers by making providers take these steps, if they do not do so themselves.”

Operator Response

But Three said that the responsibility of the customer to renegotiate their contract once it has expired.

“Whenever a new customer signs with us, we make the end-date of the contract term very clear,” a Three spokesperson told Silicon UK. “We also let them know that they can contact us at any time to discuss the range of options available should they wish to change their plan with us.

“We encourage all Three customers to contact us if they would like to change their plan at the end of their fixed term deal,” the Three spokesperson added. “They can also check how much time they have left on their plan via the My3 app.”

Vodafone meanwhile said that it does try to contact customers when thier contracts end.

“We strive to give our customers the price plan that best suits them,” a Vodafone spokesperson told Silicon UK. “Wherever possible, we contact our customers nearing the end of their contract to offer them a range of options. These include being able to upgrade their handset, receiving an extra allowance to enhance their existing plan or, if they choose, switching to a SIM only plan.”

“Customers can also change phones after just six months with our flexi-upgrade,” said Vodafone. “In addition, we were the first to abolish roaming within Europe, the first to allow customers to roll over unused data, texts and voice minutes on Pay as you go and we will soon launch the first Pay as you go service capped at £1 per day.”

Silicon UK has also approached EE for comment.

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