Mobile customers are being “ripped off” by operators who continue to charge them the full price of their contracts even when they have paid off the cost of their phone, says Which?
Some are potentially overpaying by more than £400 a year, according to the consumer watchdog.
Last year Ofcom asked operators to reduce prices to out-of-contract customers from February this year.
Operators, however, said they were offering customers plenty of choice.
Many customers choose to get a new smartphone through a monthly bill contract, effectively paying off most of its cost over a year or two. After the contract term ends, there is no longer a need to pay off a handset, so prices could drop.
But that is not always the case.
According to Which, the worst-affected were customers of Three, where about four in 10 customers whose contracts ended in the last six months claimed they saw no price drop.
Two in five EE customers and three in 10 Vodafone users said the same.
On the other hand, O2, Tesco Mobile and Virgin Mobile told customers that when their contracts ended their bills would reduce to the best available airtime deal.
Examples given by Which? included:
- an iPhone 11 from Vodafone which was £68.21 a month during contract, £62 after it ended – but an equivalent sim-only deal was available for £30
- a Samsung S20 5G from EE was £69.25 in contract, dropping to £61 after, with a sim-only deal for £35
- an iPhone 11 from Three was £51.92 during contract (including a discount for the first six months), £57 after contract, with an equivalent deal available for £22
Natalie Hitchins, head of home products and services at Which?, said: “While some mobile firms have taken action to end overpayments, our research suggests that others could do a lot more to ensure that customers are not being exposed to rip-off charges.
“Ofcom should ensure that all providers are treating their customers fairly and have taken enough steps to stop people overpaying.
“In the meantime, it is really important that customers don’t wait. If you think you might be out of contract or overpaying, check your phone bills to see if you can save money with a sim-only deal or with an upgrade to a new phone.”
EE said that the out-of-contract payment assumptions used in the report were “misleading”.
Instead of comparing prices with year-long contracts, it said “it is fairer to compare out-of-contract pricing with a 30-day sim-only deal, as that’s the equivalent notice an out-of-contract customer gives”.
It said such a “closer comparison” meant that the sim-only customer paid about £5 a month more than an out-of-contract one.
“Since May 2020, we automatically give handset customers a 10% discount off their monthly bills once they have been out-of-contract for three months,” it said, adding that it makes sure customers are “fully informed”.
Three said: “Applying an arbitrary discount to tariffs will not effectively tackle what really matters – helping customers find a contract which is both best suited to their needs and priced fairly.”
It said it allowed customers to choose what they wanted to do at the end of their contract.
“To ensure that they can make an informed choice, we send all customers a notification before the end of their contract which shows them what they are paying for now, what an equivalent sim-only tariff is, and also a sim-only tariff based on their actual usage.”
Vodafone also questioned the survey, telling the BBC that Which? had only spoken to 81 Vodafone users “with no guarantee any of them was the account holder”.
It added: “We have sent more than 1.3 million alerts so far this year. For those customers who don’t respond within three months of their contract ending, we automatically apply a 5% discount to their bill.”