Vodafone, EE, O2, Three hit with £3B overcharging lawsuit

Case alleges loyal customers continued to pay bundled rates after minimum contract terms ended

Britain's biggest mobile phone companies face legal action over claims they overcharged customers through a "loyalty penalty" after a tribunal permitted the cases to proceed.

The Competition Appeal Tribunal (CAT) ruled on Friday that collective action cases filed against Vodafone, BT/EE, O2, and Three can move forward, though it limited how far back damage claims can reach.

The cases involve contracts bundling handsets with services. The contention is that customers who continued using the service after the minimum term ended were charged the same monthly fee, and not a SIM-only fee for continued use of the network.

Plaintiff Justin Gutmann – understood to be a former executive at Citizens Advice – said he was seeking damages of more than £3 billion ($4 billion) as the "class representative" on behalf of millions of subscribers he claims were overcharged when the cases were filed in 2023.

He characterizes these excess payments as a "loyalty penalty" imposed on customers who didn't immediately switch providers.

Citizens Advice has published a notice warning that phone providers may be overcharging loyal customers.

"At the end of a two-year contract, you're free to move plans, or to switch providers. Or, if you're happy with your handset and plan, you can just stay and keep everything the same. But there's a catch. You're no longer paying for the handset – but your price stays the same," Citizens Advice stated.

The CAT ruling granted an application made by all four mobile companies to strike out any claims relating to the period before October 1, 2015, due to limitation rules, but refused an application made by Vodafone, BT/EE, and Three to also strike out claims for the period before March 8, 2017.

The tribunal approved Gutmann as class representative despite operators' arguments questioning his ability to fund the proceedings or fairly represent claimants.

A spokesperson for O2 told The Register: "At this early point in the proceedings, we welcome the Competition Appeal Tribunal's ruling that the majority of the claim has no basis to be brought, significantly reducing its scope. We maintain that there is no merit to Mr Gutmann's case for the remaining period and will continue to robustly defend our position as it proceeds."

Over at EE, a company representative told us: "The tribunal's ruling was an early stage procedural matter to determine if and how the claim should proceed, as well as to determine the claim period. We do not accept the substantive allegations of the claim. Our priority is, and always will be, to provide a great experience for our customers."

The Reg asked Vodafone and Three to comment. ®