Operators EE (BT), Vodafone, Three UK, and O2 (VMO2), have become targets of a class action claim amounting to at least £3.285 billion. The action has been initiated by consumer rights advocate Justin Gutmann and the law firm Charles Lyndon.

The operators are accused of overcharging for mobile handsets beyond the end of their contractual terms.

The class action alleges that the mobile operators abused their dominant positions by imposing a “loyalty penalty,” which involves overcharging long-standing customers for handsets even after the contractual term has ended. 

According to Gutmann, up to 28.2 million contracts may have been affected which is why the damages being sought out are so substantial. 

The Loyalty Penalty Claim has been filed in the Competition Appeal Tribunal (CAT) in London as an opt-out claim, automatically including qualifying consumers unless they choose to opt-out specifically.

The estimated losses across all mobile network operators since 2007, including interest, indicate potential compensation amount for contract holders amounting to:

• Vodafone – up to £1,823
• EE  – up to £1,101
• Three – up to £1,817
• O2 – up to £1,178

Mobile operators like EE and Vodafone, have expressed disagreement with the claims. EE said they  “strongly disagree with the speculative claim,” while Vodafone mentioned they lack sufficient detail for their legal team to assess. 

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“I’m launching this class action because I believe these four mobile phone companies have systematically exploited millions of loyal customers across the UK through loyalty penalties – taking over £3 billion out of the pockets of hard working people and their families,” said Gutmann. 

“These companies kept taking advantage of customers despite the financial crisis of 2008, Covid and now the cost of living crisis. It’s time they were held to account.”

The Loyalty Penalty Claim follows a super-complaint made by Citizens Advice to the Competition and Markets Authority (CMA) in September 2018.

The CMA, in response, said: “We do not consider that providers should continue to charge customers the same rate once they have effectively paid off their handsets at the end of the minimum contract period. This is unfair and must be stopped.”

The authority also added that customers “rightly feel ripped off, let down and frustrated.”

“If our claim is successful, it will finally stop these firms from taking advantage of their loyal customers and stop the immoral practice of loyalty penalties,” concluded Gutmann.