Millions of mobile phone customers across the UK could be in line for a payout of up to £104 each, following the launch of a massive class action lawsuit against four major network operators.
The £1.1 Billion Loyalty Penalty Claim
A collective claim exceeding £1.1 billion has been filed against Vodafone, EE (owned by BT), Three, and O2. The legal action, announced by consumer champion Justin Gutmann and the law firm Charles Lyndon, alleges that the companies exploited their market dominance to overcharge as many as 10.9 million UK customers.
This landmark case, the first of its kind to target the mobile sector's 'loyalty penalty', accuses the networks of systematically charging existing customers more than new clients for identical services. The claim is an opt-out case, meaning eligible customers will be included automatically unless they choose not to participate.
How Were Customers Allegedly Overcharged?
The lawsuit focuses on bundled mobile contracts that include both a handset and airtime services for data, minutes, and texts. During the initial minimum term, customers pay off the cost of their phone alongside the service charges.
The core allegation is that the mobile operators failed to reduce the monthly charge after this minimum contract period ended, despite the handset having been fully paid for. This meant loyal, existing customers continued to pay a premium that included a phone cost, while a new customer signing up for airtime only would pay a lower rate for the same service.
Justin Gutmann stated: "For far too long the phone companies have been taking advantage of their loyal customers. That's why it's time to stop the immoral practice of loyalty penalties."
Regulatory Backing and Potential Payouts
The legal claim follows a 2018 super-complaint by Citizens Advice to the Competition and Markets Authority (CMA). The CMA's investigation concluded that the practice was unfair, stating providers should not continue charging the same rate after the handset is paid off and that customers "rightly feel ripped off, let down and frustrated".
If the lawsuit is successful, a claimant could receive up to £104 for every affected contract they held with any of the four operators. Many consumers who have been with multiple networks over the years may have claims against more than one company.
With approval now granted to proceed, Gutmann added: "I look forward to bringing the claim to court and putting money back into the pockets of those consumers who need it to help ease cost pressures in their family budgets."
