Mobile Operators Criticised – Charging Extra for Phones You’ve Paid Off

The Citizens Advice agency has accused EE, Vodafone and Three UK of “routinely charging customers extra” for their handsets after they have been paid off, which occurs when you bundle a handset with your mobile plan but continue to pay the same monthly fee even after your contract ends.

Most mobile operators tend to offer a choice of either taking a SIM-Only plan (i.e. you just pay for the text/data/calls or mobile broadband plan of your choice) or a bundle with a mobile handset. The advantage of a bundle is that it enables consumers to spread the cost of their handset and mobile plan across the contract term (12-24 months), which is particularly useful when you have companies like Apple selling new iPhones for well into the absurd £1,000+ territory.

However bundles for the more expensive handsets can be quite expensive (c.£40-£80 per month), depending upon your choice of features, which becomes a problem when you reach the end of your contract term and find that the operator is still charging you exactly the same amount as before. Ideally at this point you should only be paying for the mobile plan and not the handset.

An online survey of 3,030 adults in Great Britain, which was conducted by ComRes for Citizens Advice between 18-25th July 2018, found that more than 1 in 3 consumers go beyond their minimum contract period.

Citizens Advice Research Found:

* From analysis of over 700 different bundled contracts, consumers would pay more in almost 3 out of 4 (73%) of cases than buying a phone outright.

* Bundled mobile contracts confuse consumers, with most (55%) assuming it is the cheaper option.

* On average customers are overcharged £22 a month, but this could be as high as £38 for high-end phones such as an iPhone 7 or Samsung Galaxy.

* Vulnerable people are more at risk of being overcharged. Older people are twice as likely to be charged for a phone they already own longer than 12 months, which could cost them on average £264.

Ofcom have already proposed a solution to this issue, which involves forcing broadband ISPs, phone providers and Mobile Network Operators (MNO) to inform customers when they approach the end of their minimum contract term (here), although Citizens Advice want the regulator to go even further.

Gillian Guy, CEO of Citizens Advice, said:

“It is unacceptable that mobile providers are knowingly overcharging customers for phones they already own.

We’ve heard a lot of talk from government and the regulator but now we need action. Other companies have already stopped doing this so we’re looking for these three major providers to follow suit.

In the meantime, consumers should check their phone bills to see if they can save money with a SIM-only contract or upgrade to a new phone.”

Meanwhile the key onus remains on consumers to ensure that they know when their contract is due to end, not least because they’ll then be free to switch to a cheaper plan or operator of their choice. Equally it’s often possible to save money by purchasing the phone separately (unlocked) and then taking a cheaper SIM-Only plan by itself, which while initially quite expensive may work out better value in the long run (especially if you get the handset in a sale).

On the other hand not all mobile operators and plans are created equal. Some operators will continue to charge the same amount at the end of your term, but they may also offer you more options to upgrade onto a more modern handset.