According to Citizens Advice, an estimated four million UK mobile phone owners are continuing to pay a premium for handsets on their bundled handset contracts despite having paid them off in full.
In total we are forking out an extra £490 million and Citizens Advice pointed the accusing finger at the networks that quietly allow us to continue to be locked into high-cost agreements.
The charity looked at more than 700 phone tariffs from all the major operators for pay-monthly contracts that included charges for handsets and compared them with their SIM-only deals.
The comparison was to assess how much less customers who buy a handset outright against those who sign-up to deals that include charges for the phone in their bundled monthly payments.
The problem, they found was that after a fixed-term contract ends customers need to switch to a new deal otherwise they continue to pay for the phone, which they now own outright. But, of course, many of us simply forget or are unaware and, consequently don’t switch.
According to their data, Citizens Advice said they discovered 73% of cases where customers had paid more than they would have done if they had bought the phone outright.
On average, they found customers were overcharged £22 a month. The worst offenders were contracts with high-end phones such as iPhone 7 or a Samsung Galaxy. With these particular phones the extra costs were estimated at £38 a month.
The charity also found that bundled deals are confusing, with many consumers believing they were getting a cheaper kind of deal. In particular vulnerable people, such as older generations were twice as likely to be charged for phones they already own at an average cost of £263 over 12 months.
It is unacceptable that mobile providers are knowingly overcharging customers for phones they already own.- Gillian Guy: Chief Executive, Citizens Advice
This practice has been previously condemned by the government and Ofcom, and the telecoms regulator proposed changes after it launched a consultation on this issue during the summer. Ofcom wanted new regulations which would require companies to alert customers when they were nearing the end of their contracts.
But Gillian Guy believes that this ‘proposal of sending a single notification to customers doesn’t go far enough to help consumers.’
In the meantime, Citizens Advice said that customers should always check their phone bills to see if they can save money, perhaps by switching to a SIM-only contract or upgrade to a new phone.