FOUR major mobile companies are facing a £1.1billion legal challenge over accusations they overcharged customers out of contract.
Class action proceedings have been brought against Vodafone, EE, Three and O2 – meaning millions of customers could be in line for up to £104 in compensation.
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Millions of mobile customers could have been overcharged and might end up with a payout
Class action lawsuits allow one person or a small group of people to sue on behalf of a larger group who all have similar claims.
They’re often used to sue companies on behalf of a large group of customers.
In this case, millions of mobile customers have allegedly been overcharged for their phones beyond the end of their contract.
The claim relates to 10.9million contracts in use between October 1, 2015 and March 31, 2025.
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Consumer rights champion Justin Gutmann brought the claim, which has now been given the green light to go to trial by the Competition Appeal Tribunal (CAT).
It’s not yet clear when the case could go to trial.
If the claim is successful, each person affected could receive as much as £104 for every contract they took out with any of the mobile operators.
Many consumers would likely have had contracts with more than one mobile operator over this time period.
If you’ve been affected, you’ll automatically be included in the claim so there’s no need to do anything.
The Sun has reached out to the companies for comment.
What are the companies being accused of?
Vodafone, EE, Three and O2 are being accused of charging customers a “loyalty penalty”, which means existing customers are paying more than new ones.
Mr Gutmann says the companies overcharged customers for their mobile handsets beyond the end of their contracts.
The customers thought to be affected are those who bought mobile phone contracts including both the handset itself and services such as data, minutes and calls.
When these contracts are agreed, the price paid by the customer includes both the cost of the phone and the services.
But the claim alleges that once the contracts had run out, customers were still being charged the same amount – even though they’d paid off the full cost of their phone.
It meant those affected were allegedly paying more than a new customer would be to use their texts, calls and data.
For example, you may have taken out a two-year combined contract for a mobile phone and unlimited texts, calls and data.
After the two years, you would have paid off the cost of the phone itself.
Yet you could have been paying the same amount for your contract after the two years was up.
A new customer who took out a SIM-only deal for unlimited texts, calls and data would likely have been paying less – but they’re essentially getting the same thing.
The lawsuit had initially included claims from before 2018, but the Competition Appeal Tribunal decided these had been brought too late.
An O2 spokesperson said: “At this early point in the proceedings, we welcome the Competition Appeal Tribunal’s ruling that the majority of the claim has no basis to be brought, significantly reducing its scope.
“We maintain that there is no merit to Mr Gutmann’s case for the remaining period and will continue to robustly defend our position as it proceeds.”
An EE spokesperson said: “The tribunal’s ruling was an early-stage procedural matter to determine if and how the claim should proceed, as well as to determine the claim period.
“We do not accept the substantive allegations of the claim. Our priority is, and always will be, to provide a great experience for our customers.”
A VodafoneThree spokesperson said: “We are disappointed with the Tribunal’s decision to certify the claim. We will review the judgment in detail before considering next steps. We will continue to robustly defend this claim.”
What are class action lawsuits?
LAWSUITS that result in compensation for many people are often described as “class action”.
In England and Wales, a Group Litigation Order (GLO) is often used for this type of lawsuit.
Class action lawsuits have become easier after the Consumer Rights Act 2015.
It means that courts can group similar claims together, rather than having to deal with hundreds or even thousands of separate claims.
There are several stages to bring this type of lawsuit, including the courts needing to give permission for a GLO.
Both sides can appeal a decision at various stages, which can make the process lengthy without a guarantee of a payout.
The Mastercard case was the first of these big claims to be launched after the changes were introduced in 2015.
It was first launched in 2017 and consumers have not yet received compensation.
Lawyers have urged Brits to join several other class action claims for compensation in the past few years.
There is no cost to sign up but the firm will usually take a cut of a payout if the claim is successful.
This money is used to cover legal costs and it can be as high as 30%.
What do I need to do?
If you think you might have been affected, you don’t need to do anything for now.
You’ll be automatically included in the claim for free if you’ve been impacted.
However you can choose to opt out if you don’t want to be part of the claim.
If you want to stay updated on the case, you can check the Loyalty Penalty Claim website.
Charges are ‘unfair’ to customers
Citizens Advice made a rare super-complaint to the Competition and Markets Authority (CMA) over the matter in 2018.
The CMA said at the time that it was “unfair” for mobile providers to charge customers the same amount after their contracts had ended.
The “loyalty penalty” is also sometimes known as double paying – when you’re essentially paying off a handset that is already paid off.
Five million mobile phone customers are at risk of double paying on their bill, according to Uswitch.
Phone providers are cashing in an extra £1.6billion because of this.
Mr Gutmann said: “For far too long the phone companies have been taking advantage of their loyal customers.
“That’s why it’s time to stop the immoral practice of loyalty penalties.
“Now that we have approval to proceed with our Loyalty Penalty Claim, I look forward to bringing the claim to court and putting money back into the pockets of those consumers who need it to help ease cost pressures in their family budgets.”
How to make sure you’re not double paying
If your contract includes both the handset and services, you should keep an eye on when it’s coming to an end.
If you’re not sure when you’ll be out of contract, you can text INFO to 85075.
This is a free service that allows you to check if you are in or out of contract, and will also let you know if you would need to pay an exit charge to leave your contract early.
You can then switch to a SIM-only deal if you’re out of contract.
Use a comparison site to look at the best SIM only deals available.
This could save you an average of £321 a year.
