Numerous people take out mobile phone contracts every year. But it is now being reported that as many as four million have been charged for phones that they already own.
According to Citizens Advice, the number of customers getting overcharged by mobile phone companies has resulted in almost £500 million extra being spent on contracts.
This issue has been raised in the past, with communications regulator Ofcom proposing that companies should send a single notification to customers before their contract ends, but some customers continue to be stung by extra charges.
Citizens Advice reported that EE, Three and Vodafone routinely charged customers for handsets even after they had paid them off in full.
Many customers are unaware that they continue to be charged for phones even after their contracts have ended, with some providers not notifying customers that they have finished paying off the cost of the phone and only need to continue paying for calls, texts and data.
According to research undertaken by Citizens Advice, customers are overcharged by £22 a month on average.
However, this figure could reach as high as £38 for devices such as an iPhone or Samsung Galaxy.
Chief executive of Citizens Advice, Gillian Guy said: “Some of the largest mobile phone providers are routinely overcharging their loyal customers.
“Mobile phones are now an essential part of modern life, but the way that the cost of handsets are hidden within some mobile phone contracts gives phone providers a way to exploit their customers”.
Citizens Advice also wants all providers to reduce their customers’ bills when they stay in the same contract past the end of a fixed deal, in order to reflect the cost of the handset being paid for.
The organisation is also calling for mobile phone companies to separate out the cost of a handset from the cost of mobile phone services in order to make it clear to the consumer when they have paid off the cost of the handset in a contract.
Displaying these costs separately when advertising the contract would also enable consumers to compare the price of contracts more easily.
Approached for comment, an Ofcom spokesperson said: “We share concerns about customers paying more than they need to. People are not being given the information they need about their contracts, so we’ve set out plans to force companies to tell customers when their minimum contract ends. We’ll continue to work with Citizens Advice, Government and mobile providers and consider any necessary further action.”
Research from Citizen Advice also found that people over the age of 65 are most likely to be hit with these extra charges.
Older people are twice as likely to be charged for a phone that they already own longer than 12 months. This could cost them an average of £264.
23% of over 65s with a handset-inclusive mobile phone contract stayed in their contract for over 12 months past the end of the fixed deal period. This is compared to 13% of people aged under 65.
“It is clearly unfair that some phone providers are charging loyal customers for handsets that they have already paid for. It’s especially concerning that older customers are more likely to be stung by this sharp practice,” added Guy.
Mystery shopping conducted by Citizens Advice also found that mobile phone networks often focus on the handset instead of the service when selling a phone.
This research also found that consumers who shop for a mobile phone contract online are often required to select a handset before they are able to view available tariffs.
As a result consumers seeking the best deal based on the amount of data and minutes they need cannot then easily compare tariffs across handsets.
What can you do if you think you’re being overcharged?
Users can ask their network to switch them to a cheaper SIM-only deal, upgrade to a new phone or end the contract and move to another provider.
However, customers are not automatically entitled to compensation and can only make a claim if it was not made clear in their contract that the deal would continue at the same price.
If you have a complaint about a mobile provider you can: