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Mobile companies overcharging customers after contract ends

Citizens Advice said EE, Vodafone and Three were all overcharging customers. Credit: PA / Three

Mobile phone providers are charging loyal customers up to £38 a month more than they should after the cost of a handset has been paid off.

Vodafone, EE and Three were all found to overcharge customers who choose to remain with their provider at the end of a fixed term deal but not take out a new handset.

Citizens Advice found that those aged over 65 were most likely to be caught out. More than a fifth (23%) of this age group on a handset-inclusive deal remained on it for more than 12 months past the end of the contract, compared to 13% of under-65s.

The advisory service said the networks were overcharging an average £22 a month and up to £38 for contracts with high-range handsets such as the iPhone 7, the Galaxy S8 or Xperia XZ Premium.

It warned that consumers could find themselves paying £46 a month extra for the iPhone8 256GB model.

£46
The amount customers could be overpaying a month for the iPhone8 256GB model

At the end of the fixed term contract consumers can stay with their network on the same contract, take out a new contract or switch to another provider.

But Citizens Advice found that customers of Vodafone, EE and Three who stayed on the same contract when their fixed term deal ended were still charged the same amount as when they were paying for the handset.

It said more than a third (36%) of people with a handset-inclusive mobile phone contract stayed on it beyond the fixed period, with 19% staying in the same contract for more than six months afterwards.

Citizens Advice has called for phone providers to give greater clarity. Credit: PA

Citizens Advice has called on all providers to reduce their customers' bills when they stay in the same contract past the end of a fixed deal to reflect the expired cost of the handset.

It wants providers to separate out the cost of a handset from the cost of the service to give customers clarity, adding that this would also allow consumers to compare the price of contracts more easily.

Citizens Advice chief executive Gillian Guy said:

Some of the largest mobile phone providers are routinely overcharging their loyal customers.

It is clearly unfair that some phone providers are charging loyal customers for handsets that they have already paid for.

It's especially concerning that older customers are more likely to be stung by this sharp practice.

Phone providers 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.

– Gillian Guy, Citizens Advice chief executive

Three said it makes the end-date of the contract term "very clear" and that it encourages all customers to contact them it they would like to change their plan at the end of a fixed term deal.

Vodafone said it contacts customers nearing the end of their contract "wherever possible" to "offer them a range of options".

EE said separating phone and tariff "doesn't always represent the best deal for consumers".