One-third of customers being overcharged on their mobile bills, says Which?
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One in three mobile customers are still being charged the full price of their contract even after paying off the cost of their handset, despite Ofcom’s effort to stop the practice last year, consumer group Which? has said.
Which? estimates that around £182m of mobile phone overpayments are being made each year, with some individuals potentially overpaying by more than £400 a year.
Last year, Ofcom, the telecoms regulator, secured voluntary commitments from most of the big players who offer bundled deals to reduce prices for out-of-contract customers, to reflect that they should no longer be paying a charge for their handset. The policy came into effect in February 2020.
However, Which? said that providers have taken different approaches to how these commitments are applied and around a third (36 per cent) of customers whose contracts have ended in the last two months are still overpaying on their bill.
The worst affected were customers of Three, which decided not to apply any discount to bundled customers when their contracts end.
It found that 43 per cent of Three customers whose contracts had ended in the last six months claimed they saw no price drop at the end of the term – meaning they were in effect continuing to pay for a handset that has already been paid off.
Based on current contract costs, that could leave a Three customer with a Samsung S20 5G phone paying £37 a month – £444 a year – more than the provider’s equivalent airtime deal for their bundle.
For EE customers, 40 per cent saw no drop in price, while for Vodafone it was 31 per cent. Discounts applied by EE and Vodafone only come into effect three months after customers have gone out of contract, which means that some of these customers may not have yet seen a change in their monthly costs.
Out-of-contract bundled customers on O2, Tesco Mobile and Virgin Mobile were found to be less likely to face such hefty overpayments, as these providers told customers they would see their bills reduced to the equivalent 30-day or best available airtime deal.
Alongside the commitments to reduce the overpayments trap, in February this year Ofcom also gave all providers 10-40 days to start sending end-of-contract notifications for customers reaching the end of their minimum term.
These messages help ensure customers know their contract is coming to an end and inform them of options available to them. Those with bundled mobile contracts should also be told about at least one SIM-only deal. Providers told Which? that they have sent end-of-contract notifications to all customers as they are required to, but that some notifications may have been missed.
Three responded to the research, saying it has some of the lowest prices on the market and that “applying an arbitrary discount to tariffs will not effectively tackle what really matters”.
The firm said: “As the leading campaigner for easy switching for the mobile industry, we are working hard to create a market where customers are engaged and happy, by pushing for easier switching; all handsets to be unlocked; end-of-contract notifications, and best tariff advice”.
Meanwhile, EE said it is “entirely wrong” to suggest it is failing to fulfil its commitment to Ofcom’s fairness measures.
“Before the mandatory introduction of end-of-contract notifications in February 2020, we already led the industry by contacting mobile customers a number of times before their contract ended, as well as afterwards, clearly informing them of their options,” the network said.
“We ensure customers are fully informed about their contract pricing and send reminders to encourage them to choose the right deal for them when their contract ends.”
Natalie Hitchins, head of home products and services at Which?, said: “While some mobile firms have taken action to end overpayments, our research suggests that others could do a lot more to ensure that customers are not being exposed to rip-off charges.
“Ofcom should ensure that all providers are treating their customers fairly and have taken enough steps to stop people overpaying.”
Ofcom responded: “We’re pleased the commitments we’ve secured from mobile providers are cutting bills for millions of customers. Our new rules on customer alerts will help reduce the number of customers paying more.
“We’re closely monitoring the impact of these changes and we will publish detailed findings in the Spring.”
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