UK Mobile Operators Attempt to Dismiss GBP3.3bn Overcharging Case
Mobile operators including EE (BT), Vodafone, Three UK and O2 (Virgin Media) yesterday attempted to dismiss a class action claim worth “at least” £3.285bn. The case, brought by consumer rights champion Justin Gutmann and law firm Charles Lyndon, accuses the operators of overcharging for mobile handsets beyond the end of their contractual term.
As most people know, mobile operators tend to offer a choice of either SIM Only (airtime) plans or plans that bundle those in with a handset (e.g. Smartphone). However, the legal case itself centred around bundles, which tend to cost more because you’re also spreading the cost of the handset across the contract term. The problem comes when some operators maintain the same monthly charge, even after your contract ends (i.e. you effectively keep paying for the handset, which has already been paid off).
At this point, a wise consumer would of course just switch to a SIM-Only option on a different operator or re-contract to a new plan, but not everybody does that (some people just forget or don’t realise). Ofcom has since put pressure on the mobile operators to mend their ways and in recent years there have been some improvements (with mixed success), but the aforementioned class action claim is more concerned with historic “overcharging“.
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At the end of 2023 Justin Gutmann, a former Head of Research and Insight at the UK’s statutory consumer champion, Citizens Advice, launched class action proceedings (here) against the UK’s four primary mobile operators (“Loyalty Penalty Claim“). The case alleged that the operators had been “abusing their dominant positions” by charging a “loyalty penalty,” in which long-standing customers were overcharged for handsets beyond the end of their contractual term.
The case claims that operators have overcharged on up to 28.2 million contracts and, as a result, will be seeking damages of at least £3.285 billion. If successful, someone who held a contract with just one of the mobile operators could receive as much as £1,823. Many consumers are expected to have claims against more than one mobile operator and so could, hypothetically, receive even more compensation.
The estimated loss across all mobile network operators since 2007 has been estimated below, all figures are said to include “simple interest“. If distributed evenly, contract holders from the mobile network operators listed below are estimated to receive the following amounts:
Customer Compensation Assumptions
➤ Vodafone – up to £1,823
➤ EE (BT Group Plc) – up to £1,101
➤ Three UK (Hutchinson 3G UK Limited) – up to £1,817
➤ O2 (Telefonica UK Limited) – up to £1,178
The relevant (linked) cases against each operator are listed below.
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Case Links by Operator
➤ 1627/7/7/23 – Mr Justin Gutmann v Telefonica UK Limited
➤ 1626/7/7/23 – Mr Justin Gutmann v Hutchison 3G UK Limited
➤ 1625/7/7/23 – Mr Justin Gutmann v EE Limited and BT Group PLC
➤ 1624/7/7/23 – Mr Justin Gutmann v Vodafone Limited and Vodafone Group PLC
The first certification stage of this case occurred yesterday with an initial hearing (CPO Application and Limitation) and the mobile operators promptly attempted to have it thrown out. The operators argued that the lawsuit is fundamentally flawed, not least because they say it alleges anti-competitive behaviour “in an industry renowned for its competitiveness” and because large parts of the case (dating back to 2007) were brought too late.
In addition, the operators argued that it was “extraordinarily difficult” for them to identify eligible class members. All of the aforementioned points do have some merit to them, although it’s not yet clear how the judge will respond. But even if the case isn’t thrown out before it reaches a full trial, then it’s possible that arguments like these may yet succeed in placing some additional restrains on the case or its scope.
Big legal cases like these often have to grapple with various complex issues, such as with respect to how the law approaches consumer choice, package / brand value and ignorance of contract details. At the same time mobile operators also have the freedom to set retail pricing however they so choose, albeit often restricted by the realities of natural competition (i.e. making your service too expensive can be counter-productive).
At this point it’s worth highlighting how the separate Collective Action on Land Lines (CALL) campaign recently tried and failed to argue a different class action case against BT (here), which related to the alleged overcharging of several million landline-only phone customers. But the court ultimately dismissed the case and found that BT’s “prices were not unfair, and therefore there was no abuse of dominant position.”
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However, Gutmann’s case against the mobile operators argues something quite different from CALL’s case, which leaves open the door for a potentially very different outcome.
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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At some point we need to take responsibility for ourselves.
If I buy a handset for £50 a month with a minimum 2 year term it’s my job to do something when that term expires.
I honestly don’t see anything wrong with how this all worked.
Entirely correct. The T&Cs will state that it’s a contract for X pounds per month for a minimum of Y months. If, at the end of that time, you choose not to do anything about that then who’s fault is it?
It sounds to me like a bunch of lawyers are missing the golden years of PPI and are looking on the next gravy train to jump on to.
The problem with that as I see it is that the phones were advertised as being “free” and you were just buying an airtime contract at an inflated price, it was kind of like going to Tesco and them saying buy a loaf of bread for £200 and we will give free TV. Such practices may be ethically dubious but whether it tips the scales into illegality is another question altogether.
This is back when they said the handsets were a gift? But you were actually paying for that gift with inflated airtime price.
It’s much better now airtime and handset are separate things.
50/50 though it’s always down to the customer to make a decision at the end of the term. Again back then it could be easy to forget but these days you get told and reminded. So maybe there is some merit in the case.
There has to be a limit to this. The only people who benefit are those taking the class action and their lawyers.
All the costs are born by consumers whether that is just the fees and time to defend any action or an award. Even if it is awarded all it is doing is taking money from one set of consumers (current) and giving it to another set of consumers (past) with a very hefty admin charge.
Yes Ofcom need to be be more proactive taking action against providers for sly practices but class actions like this can be just as unfair, especially when its basic laziness to read terms.
Current practice appears to be separate the device and airtime/data plans. Providers use Device discounts to attract SIM plans and SIM plans to attract Device purchases. As long as the overall price perceived by the consumer is acceptable what is the issue, different terms on line and in shop. There are also phone replacement plans with substantial return condition criteria. People just need to read and don’t get rushed by any process.
These class actions are very little more than business ventures. Investors give money to lawyers to fight these cases then get a sizeable chunk of the payout should the action be successful. Yet another odious practice we have inherited from our transatlantic cousins.
The mobile operators know fine well what they’re doing here. They’re putting the onus on the customer to change when their contract is up and if they don’t, it’s bonus money for them. They rely on customers not bothering, exactly the same way insurance companies do when a yearly renewal is up. They ALWAYS put the renewal price up, relying on customers not bothering to shop around. I don’t see how they have any chance of winning a class action here though. The customer can just walk away at any time when the contract is done, so ultimately it is their responsibility. Sure, make the providers change their terms going forward but I don’t see how they can argue this in court.
As a side note, I absolutely detest this split airtime/handset contract nonsense now. Yes, it avoids the subject issue, but it’s extremely misleading. As an ad example: “Samsung Galaxy S25 Ultra from £49 per month” the ad might say, but this excludes any mention of airtime. This is only the handset price.
As someone who uset work for of the above firms, we sell u the contract, then send you the terms and conditions, it’s the customers responsibility 1) read t and C’s 2) to deal with the contract when it ends. The company I worked for sent multiple End of contract notifications to say that the contract had ended.
It’s never the customers fault they ‘forget to cancel a contact’ when they sign up and they never take responsibility for it seen it so many times. Even when companies send them all the info when it ends and even after it ends.
When ever I was in the situation, dealing with a customer, id check the usage and place an disconnection straight away, if there was no usage, Instead of normal 30 days notice which is in policy, if it’s been used you can place 30 days notice or have Ur pac or stac to leave
Customers just need to take responsibility for the contracts they sign up for.
On the flip side we can’t just cancel it on the day it ends either as incase you forget and it gets cutt off without you realising, then you would be out of service, can’t win either way.
OP would also blame the victims of scammers for being scammed.
Companies providing such phone and airtime deals need to communicate with their customers before the end of the contract term and provide details on what happens at the end of the term.
This could be 2 months and 1 month before term end.
There are a lot of people who are being overcharged and are perplexed by what they need to do. Such people are taken advantage of.
Exactly!
Banks/ Building Societies/ Gas/ Electric are able to switch you to the base rate after a fixed contract expires. Why can’t these providers do something similar. Financially not in their best interest.