Personal Finance

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

Millions of mobile phone customers could receive more than £1,000 in compensation for overpaying for their contract.

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 reported earlier this year how Virgin Media O2 accused rival mobile phone companies of overcharging customers £530m for out of date contacts.

To find the best mobile phone contract and SIM deals for you, we've partnered with Uswitch.

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.

Mr Gutmann is also bringing a separate claim against Apple for slowing down the performance of older handsets. He claims this left customers with little choice but to buy a new phone or replace the battery. The case was given the green light to be heard in court in November.

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Helen Barnett

Helen is a journalist, editor and copywriter with 15 years' experience writing across print and digital publications. She previously edited the Daily Express website and has won awards as a reporter. Read more here.


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