Mobile users who stay loyal to their provider after their fixed contract ends and the cost of their handset has been paid for could be overpaying by up to £552 a year.
Research from Citizens Advice found that customers of EE, Three, and Vodafone who choose to stay on the same phone plan after their fixed deal ends do not get their bills reduced - meaning customers are paying on average an extra £22 a month for a phone they have already paid off.
But for users with higher end models, this loyalty penalty could be even more. For a 256GB iPhone 8, the charity found that customers could end up being overcharged by £46 a month on average – or £552 a year.
Citizens Advice says more than a third (36%) of people with a handset-inclusive mobile phone contract stayed in the same contract after the end of their fixed deal period, with two in 10 (19%) staying in the same contract for over six months afterwards.
People aged over-65 are most likely to be stung. The research found that 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, compared to 13% of people aged under 65.
The charity is calling for mobile phone companies to separate out the cost of a handset from the cost of mobile phone services.
Gillian Guy, chief executive of Citizens Advice, says: “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.
“Phone providers must now make sure that any customers staying in a contract past the end of a fixed deal have their monthly bill reduced to reflect the cost of the handset.”
O2 hasn’t been included in Citizens Advice’s investigation as it says “most” – but not all – of the provider’s contracts separate out the handset costs from the tariff costs.