A £3.3 billion class action lawsuit has been initiated against the UK's major mobile phone companies, accusing them of imposing "loyalty penalties" on longstanding customers. The legal action, led by campaigner Justin Gutmann and law firm Charles Lyndon, targets BT-owned EE, Vodafone, Three, and O2 (part of Virgin Media O2).
Allegations include overcharging customers by continuing to bill for handsets even after they have been paid off at the end of their initial contracts, with the same services being offered to new customers at a more favourable rate to attract them from competitors.
This lawsuit comes at a time when concerns about telecoms pricing are escalating amid the broader cost of living crisis, prompting regulatory scrutiny by Ofcom, the regulator for mobile and broadband operators. The proposed merger between Vodafone and the smallest operator, Three, has also raised worries among consumer advocates, who fear it could diminish competition on pricing by reducing the number of mobile network operators from four to three.
The issue of loyalty penalties was previously addressed in a 2018 "super complaint" by the consumers' body Citizens Advice to the competition watchdog, resulting in voluntary commitments from most mobile operators. The lawsuit contends that this practice has affected around 5 million consumers across more than 28 million current and historical contracts.