A third of customers are being ‘ripped off’ by their mobile phone providers, according to new research by consumer rights experts Which.
The watchdog has found firms are continuing to charge customers the full price for their contract, even after the cost of the handset has been paid off.
This is bagging mobile phone companies a huge £182 million pounds in overpayments with some people spending more than £400 extra a year.
It comes despite voluntary commitments secured by regulator Ofcom last year that saw most of the big players agree to reduce prices for out-of-contract customers. These came into effect in February 2020.
But Which has found providers have taken different approaches to how these commitments are applied. A third of customers who pay for a ‘bundle’ of a handset plus data, texts and minutes, and whose contracts have ended in the last two months, were still overpaying on their bill.
Natalie Hitchins, Head of Home Products and Services at Which, said: ‘While some mobile firms have taken action to end overpayments, our research suggests that others could do a lot more to ensure that customers are not being exposed to rip-off charges.
‘Ofcom should ensure that all providers are treating their customers fairly and have taken enough steps to stop people overpaying.’
The worst affected were customers of Three, which decided not to apply any discount to bundled customers when their contracts end.
More than four in 10 (43%) of Three customers whose contracts had ended in the last six months claimed they saw no price drop at the end of the term – meaning they were in effect continuing to pay for a handset that has already been paid off.
Based on current contract costs, that could leave a Three customer with a Samsung S20 5G phone paying £37 a month – or £444 a year.
For EE customers it was 40% that saw no drop in price, and for Vodafone, it was 31%. Discounts applied by EE and Vodafone only come into effect three months after customers have gone out-of-contract, which means that some of these customers may not have yet seen a change in their monthly costs.
In both cases, this approach could leave customers unnecessarily paying the full price of their contract for three months after it ends. Even when the discounts are applied, they are unlikely to be sufficient to offset the overpayments.
Out-of-contract bundled customers on O2, Tesco Mobile and Virgin Mobile are less likely to face such hefty overpayments, as these providers told customers they would see their bills reduced to the equivalent 30-day, or best available, airtime deal.
Which is now calling for the regulator to review whether mobile providers are truly treating their customers fairly when it comes to mobile contracts which currently could still leave many people out of pocket.
An EE spokesperson said it was ‘entirely wrong’ to suggest the company isn’t fulfilling its commitment to Ofcom’s fairness measures.
They said customers are ‘fully informed’ about contract prices and when deals are coming to an end.
A Three spokesperson also defended the company, saying ‘applying an arbitrary discount to tariffs’ was not the best way to give customers a choice about what they should do at the end of a contract.
A statement said: ‘To ensure that they can make an informed choice, we send all customers a notification before the end of their contract which shows them what they are paying for now, what an equivalent SIM only tariff is and also a SIM only tariff based on their actual usage.’
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What is Ofcom and what does it cover?
Ofcom is the regulator for the communications services that we use and rely on each day.
The watchdog makes sure people get the best from their broadband, home phone and mobile services, as well as keeping an eye on TV and radio.
Ofcom deals with most content on television, radio and video-on-demand services, including the BBC. However, if your complaint is about something you saw or heard in a BBC programme, you may need to complain to the BBC first.
Its rules for television and radio programmes are set out in the Broadcasting Code.
The rules in the Broadcasting Code also apply to the BBC iPlayer.
This Broadcasting Code is the rule book that broadcasters have to follow and it covers a number of areas, including; protecting the under-18s, protecting audiences from harmful and/or offensive material and ensuring that news, in whatever form, is reported with due accuracy and presented with due impartiality.
Audiences can complain to Ofcom if they believe a breach of the Broadcasting Code has been made.
Every time Ofcom receives a complaint from a viewer or listener, they assess it to see if it needs further investigation.
If Ofcom decide to investigate, they will include the case in a list of new investigations, published in the Broadcast and On Demand Bulletin.
An investigation is a formal process which can take some time depending on the complexity of the issues involved.
Ofcom can also launch investigations in the absence of a complaint from a viewer or listener.
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