Folk with mobiles on Vodafone, EE and Three are being stung by an average £22 per month for staying on their contracts after their handsets have been paid off, according to Citizens Advice.
Customers who choose to stay on the same plan after the two-year fixed deal ends are not getting their bills reduced, meaning they are paying extra for a phone they already own.
The extra cost can be as much as £38 a month on average for contracts with high-range handsets like the iPhone 7, Galaxy S8 and Xperia XZ Premium. For the iPhone 8 256GB package, customers could end up being overcharged by £46 a month on average.
The elderly are most likely to be hit – 23 per cent of over-65s with a handset-inclusive contract stayed on it for more than 12 months beyond the fixed-deal period, compared to 13 per cent of under-65s.
Citizens Advice is calling on providers to reduce their customers' bills when they stay in the same contract past the end of a fixed deal to reflect the handset being paid for.
Gillian Guy, chief exec of the UK consumer-rights charity, said: "It is clearly unfair that some phone providers are charging loyal customers for handsets that they have already paid for. It's especially concerning that older customers are more likely to be stung by this sharp practice."
She said providers should make it much easier for consumers to compare prices by separating out the cost of handsets from the cost of services like data and minutes for all contracts, that way it would be clearer what they're paying for. "It's important that Ofcom and the government are prepared to protect consumers by making providers take these steps, if they do not do so themselves."
An EE spokesperson said separating phone and tariff doesn't always represent the best deal for consumers. "We send our customers regular updates about their options before and after they reach the end of their contract, and the vast majority of our customers upgrade to a new phone or move to a SIM-only plan near the end of their contract."
A Vodafone spokesperson said: "We strive to give our customers the price plan that best suits them. Wherever possible, we contact our customers nearing the end of their contract to offer them a range of options."
A Three spokesman said that whenever a new customer signs up, the firm makes the end date of the contract term clear and encourages all customers to contact them if they'd like to change their plans. "We appreciate any feedback to help us improve our processes and are exploring new ways to ensure our customers can get the most out of their mobile phones at a competitive price," he added.
Meanwhile, being the honourable exception, O2 gloated: “Forcing customers to continue to pay for a phone they already own not only hits their pockets but undermines trust and the reputation of the industry." It added: "We’d like to see the other operators review their position and follow our lead.” ®