(12/05/2015) Millions of Brits overcharged for mobile handset – we reveal how not to be a victim
If you bought a loaf of bread, yet continued to pay for it long after you’d made it into toast, people would most probably assume that you were a little odd, right? Yet that’s what millions of Brits are doing every day with their mobile phone contracts – except in this case they’re forking out for a handset they’ve already paid in full for.
According to recent research by consumer magazine Which?, almost half of people with mobile phone contracts end up overpaying by an average of £92. That’s a potential unnecessary cost to the British consumer of £355 million per year – and definitely a cause to raise an issue with your operator via resolver.co.uk
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Spreading the cost of the handset
The reason so many consumers keep paying for phones they’ve already paid for is that many mobile phone operators incorporate the cost of the handset into the contracts they offer, bundling the line rental/data package in with the cost of the actual phone. The consumer then pays a monthly fee for a fixed term – usually 18 months to two years.
After this period, the physical phone is usually paid for, but because both costs are rolled into one the customer is often unaware what each individual part costs, and may even continue paying the larger monthly fee without upgrading their phone or renegotiating the contract.
“Consumers are being misled and as a result are collectively paying millions of pounds each year for a phone they have paid off,” said Which? executive director Richard Lloyd.
“All mobile phone operators should separate out the cost of the handset so people don’t continue to pay after the contract comes to an end. Mobile providers need to play fair and ensure their customers are not paying over the odds.”
Time to split the bill?
The Which? report found that 60 per cent of the people surveyed felt that finding a provider that clearly shows the tariff and handset costs by separating its bills was a really important factor to them when they looked at switching phones.
Fortunately, there’s good news in this area – Virgin media, Utility Warehouse, Tesco Mobile, GiffGaff and O2 all offer contract tariffs where the handset cost is separated from the cost of the contract itself.
With many examples of this type of contract, such as with O2 Refresh, your bill automatically reduces once you’ve paid off the handset part.
Sadly for EE, Three and Vodafone customers there is not yet a choice to have your contract structured in this way.
How to avoid being overcharged
If you find you’re stuck with a one-size-fits-all contract price, then you need to keep on your toes and be ready to update or upgrade your contract as soon as you can. This way you minimise the risk of overpaying when your lock-in period is finished.
In fairness to mobile phone operators, many companies will send you reminders when you’re due for an upgrade – so keep an eye on any emails, posts or texts from your operator (even if most of the time they are just irritating marketing puff). Some companies will also allow you to upgrade your phone early – but this may also lock you in to another confusing fixed-period one-price contract, so always check the small print before making any decision.
Talking of decisions – don’t feel pressured into signing up to a new contract. Sometimes you might receive a marketing phone call, email or text encouraging you to sign up to a new contract – always do some research before taking the plunge! As well as the plethora of comparison websites that encourage you to switch, you can also make fairly simple comparisons the old-fashioned manual way.
In addition, some operators (such as Vodafone) will allow you to switch to a SIM-only contract after your fixed-term bundle package is complete, but unlike packages with separate charges for phone and tariff, this is not an automatic switch to a cheaper plan.
What to do if you feel you’ve been unfairly overcharged
If you feel you’ve been caught out by this, then you should raise the issue with your mobile operator (you can do this via resolver.co.uk).
Make sure you gather as much paperwork/emails as possible regarding your account so you can define the time you feel you were overcharged from, then get in touch with your provider – preferably via email – setting out your case.
Remember, though, that you are likely to be relying on the good will of your service provider, as there is no legislation to protect you from these over-payments, and there is only the prospect of you moving to another provider to incentivise them to look favourably on your case.