Millions of Britons are overpaying on mobile phone contracts as operators unfairly charge customers on bundled packages, according to new data released by Virgin Media O2.
Telecom operator Virgin Media O2 released its findings on Friday and called on competitors to stop ‘cheating’ consumers as the UK grapples with a cost-of-living crisis.
EE, Vodafone and Three UK offer ‘bundled contracts’ which combine the price of a phone with airtime costs for minutes, messages and data. These packages allow customers to pay the cost of a smartphone for a period of 12, 18 or 24 months.
But the research, conducted by Virgin Media O2 and Strand Partners, found that operators routinely failed to reduce contract costs for customers even after the cost of their device had been reimbursed. He estimated that this could equate to £530 million of consumer overspend each year.
Telecommunications groups are trying to rebuild their reputation after the sector regulator launched an investigation whether companies treat customers fairly.
Virgin Media O2’s results follow those of consumer rights group Which? which in 2020 found that one in three “bundled” customers were still charged the full contract price two months after paying for the phone.
“The cost-of-living crisis has shone a spotlight on unfair practices across the telecom industry, including excessive charges for phones that have already been paid for and mid-contract price hikes above inflation,” Which one? said friday.
“While it is good that Virgin Media O2 does not apply inflationary price hikes to the handsets portion of bundled contracts, O2 was among the big four mobile providers that carried out eye-watering mid-contract price hikes in my mouth last month,” he added.
Virgin Media O2 has since 2013 broken down the cost of phones by airtime into bills and said it automatically transitions customers to SIM-only contracts – where you only pay the cost of data, messages and minutes you use – when they’ve paid for their device.
“We’re in a cost-of-living crisis and we don’t want to rip people off,” said Gareth Turpin, chief commercial officer at Virgin Media O2. “We want to work in an industry where customers trust us.”
Vodafone said in a statement it was “disappointed to see VM02 confuse consumers with misinformation and sensational headlines at a time when, as an industry, we all need to provide consumers with more clarity to enable them to make the best choices for their needs.” “.
It added that it has offered customers split contracts, and all phone customers on legacy contracts “are contacted repeatedly” when they’ve finished paying for a phone or their contract ends.
After three months, a £5 monthly discount was automatically applied if customers didn’t switch to a new tariff, Vodafone added.
Three said it has begun offering “split contracts,” which separate airtime and phone costs. However, most of his clients are currently on combined contracts.
BT, which owns mobile operator EE, said it offers a small percentage of customers split contracts and provides clear end-of-contract notifications, including the best deal for customers based on their usage.
Virgin Media O2 said the average consumer overpays for their phone for six months, with a handful overpaying for up to five years.
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