Mobile phone contract customers could be in line for £1,800 compensation

Justin Gutmann, a former executive at Citizens Advice, is seeking more than £3 billion in damages on behalf of 4.8 million people.

He claims the four biggest network providers - Vodafone, EE, Three and O2, charged customers more than they should when their contracts ended.

Mobile phone contracts usually include a payment for a certain amount of data, texts and calls, but also cover the cost of the device as well.

The cost of the phone will have been repaid when the contract ends, but many continue using the same handset for the same monthly charge.

This means they are paying for something they had already been charged for – and often more than a new customer on a Sim-only deal receiving the same usage.

NimbleFins previously reported in late 2023 how Virgin Media O2 accused rival mobile phone companies of overcharging customers £530 million for out-of-date contracts.The accusation centered on the 'loyalty penalty,' where providers continue to charge customers for handsets they have already paid off in full once their initial contract term ends.

This push for fairer billing coincides with a major regulatory win for consumers. As of January 17, 2025, Ofcom has officially banned inflation-linked mid-contract price rises for all new and renewing mobile and broadband contracts. Providers are no longer allowed to use vague percentages tied to the Consumer Price Index (CPI); instead, any future price increases must be stated clearly in pounds and pence at the point of sale, offering customers far greater transparency over the true lifetime cost of their contracts.

Mr Gutmann believes 28.2 million contracts could be affected from 2007, and a successful claim could see more than £1,800 awarded to a customer.

He told the BBC: "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."

Mr Gutmann is making the claim on behalf of all consumers, who will be automatically included unless they choose to opt out.

But it could be a few years before the case is heard at trial, with Mr Gutmann currently waiting for certification.

EE strongly disagrees with the claims while O2 said it had not been contacted. Vodafone said it does not have "sufficient detail" to assess the claims, and Three did not comment.

O2 said it was the first to bring in split pricing which separates the usage and handset costs on a contract to reduce the monthly bill once the phone has been paid for.

In our previous report, Virgin Media O2 said it wanted other operators to do the same. EE, Vodafone and BT said they already offered a split contract, however it's not clear if this is automatically applied across all deals.

Justin Gutmann is also leading a separate claim against Apple for slowing down the performance of older handsets, a practice known as 'throttling'. Following the green light for a full trial in late 2023, the case progressed through the Competition Appeal Tribunal (CAT) in 2024 and 2025. He claims this left customers with little choice but to buy a new phone or replace the battery.

Meanwhile, the main £3 billion class-action claim against the UK’s four major network operators (EE, O2, Three, and Vodafone) is moving toward a landmark trial expected later in 2026, which could see millions of customers eligible for compensation.

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