Lawsuit alleging overcharging by EE, O2, Three & Vodafone could lead to payout for millions of customers

Young woman looking concerned at mobile phone

The four biggest mobile network providers could owe customers with existing or historical handset contracts up to £1,823 each if a new legal claim is successful.

A new lawsuit being launched against the four biggest mobile network providers in the UK could lead to payouts for millions. Customers of EE, O2, Three and Vodafone who took out contracts with handsets could be in line for up to £1,823 each if the claim is successful.

It’s alleged that customers incurred “loyalty penalties” by continuing to pay the same price for contracts even after the handset had been paid off. For this reason, only customers with handsets may be eligible for any payout, not those on SIM only deals.

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What are EE, O2, Three and Vodafone accused of?

The lawsuit concerns customers who took out a contract that included a handset, in addition to airtime services – in other words minutes, texts and data.

It’s alleged that the companies continued to charge customers the same amount for their contracts, even after the handsets had been paid off. As such, existing customers were charged more than new customers on SIM only contracts would have been.

These “loyalty penalties” are not only an issue for mobile phone contracts. In 2022, the charity Citizens Advice claimed that around one in seven people could still be paying over the odds for products such as TV, broadband and mortgages.

Who is bringing the legal case?

The legal action has been brought by consumer champion Justin Gutmann, along with law firm Charles Lyndon, seeking damages of at least £3.3 billion. It’s claimed that customers were overcharged on as many as 28.2 million contracts.

The companies in question are:

  • EE, which is owned by BT
  • O2, which is part of Virgin Media O2
  • Three
  • Vodafone

Mr Gutmann, a former executive of Citizens Advice, said: “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 £3bn out of the pockets of hard working people and their families.

“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.”

Who qualifies for a payout?

The legal claim is a class action, which means that – if successful – any affected customer is included in the claim. They won’t need to pay anything towards legal costs, or be identified by name, but are entitled to opt out if they want to.

While exactly who qualifies will be outlined during the legal process, you’re likely to qualify if the following all apply:

  • You’re a UK resident.
  • You had at least one contract with EE, O2, Three or Vodafone with handset and airtime between 2007 and 2023.
  • By the end of your contract term, you continued making payments, but could have paid less by being on a SIM only deal.

What happens next?

The claim has been filed with the Competition Appeal Tribunal but these things take time. The Tribunal first needs to decide if the claim can be processed as a class action, the outcome of which has no set date.

If you think you were affected, it’s worth noting that these types of cases could take years to be settled. If the legal action is green-lighted, it still has to go to court and then perhaps a lengthy appeals process. But it’s worth watching this space to see if you could be due a payout of thousands.