U.K. mobile network operators EE, Vodafone, Three UK, and O2 are facing a class-action lawsuit spearheaded by consumer rights advocate Justin Gutmann and law firm Charles Lyndon, according to a recent report by ISPreview. The claim, worth at least £3.285 billion, accuses these operators of historically overcharging customers for mobile handsets beyond their contractual terms.
Mobile operators offer two main types of plans: SIM-Only plans and bundled plans with a mobile handset. While bundled plans allow consumers to spread the cost of their handset and mobile plan across the contract term, issues arise when operators continue charging the same monthly payments even after the handset cost is fully paid off. This practice leads to customers unknowingly overpaying, especially if they don’t switch to a SIM-Only plan or change their operator after their contract ends.
The class action, known as the “Loyalty Penalty Claim,” follows a super-complaint from Citizens Advice to the Competition and Markets Authority in 2018. The CMA found that continuing to charge customers the same rate after they’ve paid off their handsets is unfair. Ofcom, the U.K.’s communication regulator, has attempted to address this issue through voluntary agreements and the introduction of End-of-Contract Notifications, but these have not led to a ban on the practice.
Justin Gutmann alleges that up to 28.2 million contracts were overcharged, seeking damages of at least £3.285 billion. The class actions have been filed in the Competition Appeal Tribunal in London. This is an opt-out claim, meaning qualifying consumers will be automatically included unless they specifically opt out.
If the compensation from the class action lawsuit is distributed evenly among contract holders, those with Vodafone could receive up to £1,823 each. Similarly, customers of EE (BT Group Plc) might get up to £1,101, while those with Three (Hutchinson 3G UK Limited) could be entitled to as much as £1,817. Additionally, O2 (Telefonica UK Limited) subscribers might receive up to £1,178 each.
EE expressed strong disagreement with the claim, Vodafone is awaiting more details, and Three UK declined to comment to ISPreview. O2, known for its split contracts, stated they haven’t been contacted about the claim and highlighted their early adoption of plans that reduce customers’ bills once handsets are paid off.