O2, EE, Vodafone and Three face a claim that could be worth billions
It is alleged customers of Vodafone, EE, Three and O2 have carried on paying for their handset after their original contract expired.
Ex-Citizens Advice executive Justin Gutmann and the law firm Charles Lyndon say they are launching class-action proceedings against the four mobile networks.
Mr Gutmann is seeking damages of at least £3.28billion. Affected customers could receive as much as £1,823 each, he said.
A contract is often for both the mobile handset and airtime use.
The case alleges operators did not lower charges once the minimum term had expired, despite consumers having paid for their gadget.
Existing customers were charged more than new ones just paying for airtime services. Mr Gutmann says 28.3 million phone contracts could be involved from 2007.
He said: “If our claim is successful, it will finally stop these firms from taking advantage of their loyal customers and stop the immoral practice of loyalty penalties.”
It is an opt-out claim, which means qualifying consumers would be automatically included for free unless they follow specific steps, says Mr Gutmann. But it could take several years to go to court.
He is seeking certification, a step needed before a trial. Mr Gutmann said: “It may be a year or two.”
The case follows a rare super-complaint from Citizens Advice to regulators at the Competition and Markets Authority in 2018.
The CMA said: “We do not consider that providers should continue to charge customers the same rate once they have effectively paid off their handsets at the end of the minimum contract period. This is unfair and must be stopped.”
It said customers “rightly feel ripped off, let down and frustrated”.
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Mr Gutmann added that the phone firms “have systematically exploited millions through loyalty penalties – taking over £3billion out of the pockets of hard-working people and their families.”
He added: “These companies kept taking advantage of customers despite the financial crisis of 2008, Covid and the cost-of-living crisis. It’s time they were held to account.”
Vodafone said it did not have sufficient detail to assess the claim.
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O2 said it was the first provider to have “split contracts a decade ago which automatically and fully reduce customers’ bills once they’ve paid off their handset”.
EE said it disagreed with “the speculative claim”, adding that it offers “a robust process for dealing with end-of-contract notifications”.
Three was asked to comment.
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