Justin Gutmann: Why I’m launching a £3bn claim against mobile phone companies

Justin Gutmann is the former head of research and insight at Citizens Advice. As a consumer champion, he has previously taken legal action against Apple and British train operators. Below he explains how he tackles the telecom giants.

There is nothing wrong with taking out a loan. We all do it to pay for big purchases, whether it's buying a house or a car.

We enter into contracts, take possession of the item and once we pay it off, no more money will be charged. But there is one big exception: mobile phone contracts.

Justin Gutmann: The consumer champion takes on the telecom giants

For decades, Britain's largest mobile network operators have sold us contracts that included a mobile phone and airtime services such as data, calls and minutes.

When the contract ends, we have already paid for the phone. Yet companies such as Vodafone, EE, Three and O2 continued to charge us the same price.

This is called a 'loyalty penalty'. Existing customers have to pay for something they already paid for.

My contention is that the overpayments to Vodafone, EE, Three and O2 total over £3 billion pounds in additional costs.

And last Friday, I launched a class action to try to get that money back on behalf of millions of their customers.

Three billion pounds may sound like a lot of money; the amount that people have paid too much is rising rapidly.

Let's say you've signed a two-year contract, paying £25 for the phone and £25 for airtime.

After the two years were up, you continued to pay the extra £25 per month for the phone.

That's €300 in just one year. In a cost-of-living crisis, that money can mean the difference between paying your bills or incurring debt.

Extra costs: Consumer champion Justin Gutmann says consumers could be owed £3 billion

Extra costs: Consumer champion Justin Gutmann says consumers could be owed £3 billion

Examples like this were widespread.

At one point, Ofcom found that almost all Vodafone customers who had exceeded the minimum contract term were paying too much, and that 70 percent of EE and O2 customers did so as well.

This behavior was exploitative. Together they control about 87 percent of the market – customers have few other options.

I'm not the first to complain, although my campaigning on behalf of consumers goes back more than a decade to when I was head of research at Citizens Advice.

Both Ofcom and the Competition and Markets Authority have carried out major investigations and criticized the behavior of mobile phone companies, with the latter saying that consumers “rightly feel ripped off, let down and frustrated” and that loyalty penalties were “unfair and must be stopped '. .

Unfortunately, these companies have done little to change their behavior.

Perhaps this is because for most, the costs and time involved in a lawsuit are too high.

Launching a class action, a relatively new way to access justice in Britain, anyone who has paid the loyalty penalty will be included in the claim for free unless they follow specific steps to opt out.

I have always tried to be a champion for consumers and stand up when companies use their monopoly power to exploit their customers.

We hope that anyone who has paid the loyalty penalty to one of these companies will log on to our website to stay informed of the progress of the claim.

My ultimate goal is that it will finally end the practice of charging loyalty penalties. People should get back what they paid. It's only fair.