UK mobile networks face a multibillion-pound lawsuit over alleged “loyalty penalties”
Several of the UK’s biggest mobile operators, including Vodafone, EE, O2 and Three, are facing a major class action lawsuit accusing them of overcharging customers who stayed on their contracts after paying off their handsets.
The case is being brought on behalf of millions of mobile users by consumer advocate Justin Gutmann and is valued at a huge £3.2bn.
He argues that the networks imposed an unfair “loyalty penalty” on customers.
According to the claim, customers who continued using their mobile plans after their minimum contract period ended were still charged for the cost of devices they had already fully paid for.
A recent ruling from the Competition Appeal Tribunal (CAT) on has now allowed a significant part of the case to move forward.
While the tribunal dismissed claims relating to losses incurred before October 2015, on the grounds that they were brought too late, it confirmed that all claims from after that date can proceed to trial.
The lawsuit targets Vodafone, BT-owned EE, Telefonica’s O2 and Hutchison’s Three UK, the latter of which completed a £19 billion merger with Vodafone last year.
Gutmann’s legal team argues that millions of loyal customers were charged more than necessary, despite regulator pressure in recent years for networks to separate handset and airtime costs.
The mobile companies strongly dispute the allegations.
Lawyers representing the networks say the lawsuit is “fundamentally flawed,” arguing it accuses firms of anti-competitive behaviour in an industry renowned for its competitiveness.
Despite those protestations, the case will now progress through the courts, setting up what could become one of the UK’s largest consumer actions in the telecom sector.