June 23, 2024

UK Mobile Phone Firms Face £3bn Lawsuit for Overcharging Customers

Vodafone, O2, EE, and Three — the four largest network operators in the UK have been sued for £3 billion in a class-action lawsuit accusing them of overcharging.

The companies have allegedly abused their dominance in the market to carry out the immoral practice on up to 28.2 million current and historical mobile phone contracts in the UK since 2007.

The lawsuit can potentially entitle millions of UK customers to hefty payouts if the companies are found to be guilty as charged. The claim has been filed with the Competition Appeal Tribunal in London, seeking damages on behalf of the overcharged customers.

Here’s How The Firms Overcharged Their Customers

The four leading mobile network operators have allegedly imposed a ‘loyalty penalty’ on their customers by continuing to charge for their handsets well after they had already been paid for.

The class-action lawsuit was filed by former Citizens Advice executive Justin Gutmann, together with law firm Charles Lyndon.

Customers can enter contracts with these operators to gradually pay off the cost of a smartphone over two to three years. At the time of signing the contract, the agreed amount included both the cost of the network services and the repayment of the handset, Gutmann explained.

However, he claims that the monthly bill amount wasn’t actually reduced even after customers had paid off the smartphones.

In other words, the four companies were charging their customers for something they had completely paid for already. This also means that the customers were being overcharged for the services since the monthly bill couldn’t actually include the repayment cost of the phones any longer.

The lawsuit also goes on to point out how loyal customers are being made to pay more than new customers. Someone opting for a SIM-only deal, for instance, has to pay a cheaper monthly bill than a customer who entered a smartphone repayment contract and finished paying for the handset already.

Affected Customers to Potentially Receive More Than £1,800

Over 4.8 million qualifying customers who entered contracts with any of the four companies would be automatically included in the claim. However, those who don’t wish to be a part of it can opt out of the claim by following the necessary steps.

The lawsuit seeks damages of at least £3.285bn, which means each affected customer could potentially receive over £1,800 if the claim is successful.

While Three refused to comment on the allegation, an EE spokesperson strongly rejected the claim and called it “speculative”. When approached for a comment, Vodafone responded that the allegations had just been brought to the company’s attention and it didn’t have enough information for its legal team to assess at the moment.

According to an O2 spokesperson, they were yet to discuss the claim with their legal team at the time.

[We were] the first provider to have launched split contracts a decade ago, which automatically and fully reduce customers’ bills once they’ve paid off their handset.O2 spokesperson

The firm also requested other operators to introduce similar changes to make sure that customers don’t overpay for handsets that have already been paid off, it claimed.

While the lawsuit might potentially be good news for qualifying customers, it remains to be seen if the operators are actually found guilty of overcharging.

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