Do you have a mobile phone? If so, do you know how much you paid for your handset or are you still paying for it?
Basically, there are two ways you can buy a mobile phone handset. You can either,
i) buy one separately and then pay for your calls/texts/data via a SIM-only tariff, or
ii) buy one from a mobile phone service provider as part of a fixed term contract on a monthly basis when the cost is combined or “bundled” with the tariff you pay for your calls/text/data.
You can either pay up to £700 or more for the latest smartphone (less for a lower specification or a used phone) or spread the cost of the handset over the length of a term contract. At the end of the contract you are free to start the process over again or to continue with your existing provider. Where customer choice is concerned, so far, so good.
A year ago, Citizens Advice highlighted a problem with this arrangement. Customers who opted to buy their phones by instalments – option ii) above – were being charged the same monthly payments after the cost of the phone had been covered.
In August 2017, Citizens Advice analysed over 700 different phone tariffs (which included handset costs) offered by the three largest providers in the UK. The analysis discovered that:
- more than 1 in 3 customers continued making the same monthly payments beyond their minimum contract period,
- on average these customers spent £22 (and in some cases up to £38) a month over six months they need not have spent.
In July of this year Citizens Advice commissioned an online survey of over 3,000 adults in Great Britain to find out whether the situation had changed. The latest survey revealed that companies which operate Britain’s biggest mobile phone networks still routinely charge customers for their handsets after they have been paid for. The research also found:
- Bundled mobile contracts confuse consumers, with most (55%) assuming it is the cheaper option.
- Older people are twice as likely to be charged for a phone they already own, costing on average well over £250.
At last Ofcom, the government’s regulator has now completed its consultation on how to address this problem. Customers are often unaware they are being charged for handsets after their contracts have ended, even though they own the phone and only need to continue paying for calls, texts and data.
Citizens Advice is calling on those companies still taking money every month from customers who have already paid for their handsets to make the pricing of mobile services and phones more transparent by separating out the cost of mobile service and the phone – something that some providers do already. Bundled deals, without any information on the effective cost of the handset, are still the most common type of mobile contract and typically last 2 years.
There has been a lot of talk from government and the regulator and action is now required. Some companies have already stopped doing this and there is no reason why all providers should not follow suit. In the meantime, you may want to check your mobile phone bill to see if you can save money with a SIM-only contract or upgrade to a new phone.
If you feel you might have cause for complaint about how you have been charged for your mobile phone handset you can get advice from the Citizens Advice consumer help line on 03454 04 05 06.
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