Millions of Britons overpay for handsets by over £500m each year

As the cost of living crisis continues, Britons are urged to check their mobile phone contract term to ensure they are not overpaying as providers are not making customers aware. As a result of this, customers are overpaying hundreds on a handset they already own.

Virgin Media O2 has today called on other mobile operators to introduce changes that would stop millions of consumers from overpaying for their mobile phones. This comes as part of the company’s new campaign which aims to put an end to the “smartphone swindle”.

Ellis Wint is one of the millions of people who have felt ‘swindled’ by their provider after overpaying for his phone by over £100.

Mr Wint was paying £66 for his last contract which came to an end in September 2021. He decided to wait for the new iPhone to be released before upgrading and ended up being out of contract for about two months. Despite being out of contract, he claimed his provider continued to charge him the same amount each month.

He said: “I was in a position where I felt that waiting [for the new iPhone] would have been the best thing to do. I didn’t know what all of the alternatives were [with my contract] until I did a bit of research and spoke to other people.

“During the two months, I was out of contract, I essentially paid an additional £130 for the same phone, even though the phone itself had been paid off.

“It’s disappointing. Obviously, I only stayed out of contract for a couple of months, but potentially somebody who isn’t waiting for a new phone, has finished their contract and doesn’t know what their options are – they are being taken advantage of because no one has told them their handset is paid off. I think it should come as a standard that it’s reduced, and it should be down to providers to inform customers.”

To ensure this doesn’t happen again, Mr Wint has now taken out a split contract where he pays separately for his SIM and his phone, ensuring he won’t pay more than he needs to in future.

With traditional phone contracts bundling together airtime costs for minutes, texts and data with the cost of the handset, millions are still paying high monthly costs, despite owning the phone outright.

Older Britons and those on low incomes will be most affected if they aren’t vigilant, the research found.

Age UK London found that more than four in ten (44 percent ) people who have been out of contract for 12 months are on low incomes, and could be feeling the squeeze of rising bills. These people are earning less than £15,000 per year so saving extra cash could be vital.

Additionally, three in five (60 percent) of those over the age of 65 and out of the contract have been so for a year or more. They are potentially paying hundreds of pounds too much for their smartphone.

If providers can put an end to handset overpayments, many vulnerable customers could benefit from the extra cash saved.

Millions of people are still paying for phones they already own each year, with some operators sending bills that make no reference to a phone being included in their plan, new research and analysis from Virgin Media O2 shows.

Around 93 percent of Britons are completely unaware they could be charged for handsets they’ve already paid off.

Three of the UK’s big four mobile providers – are estimated to collectively have millions of customers on traditional phone contracts that bundle together airtime costs for minutes, texts and data with the cost of the handset.

This overpayment problem could be costing Britons.£1.4million a day, with those taking flagship handsets overpaying the most.

Around 58 percent of the average monthly bill is attributed to the cost of the device, according to the consumer charity Citizens Advice.

This means that for millions of people who have finished their minimum contract term, over half of their bill is spent paying for phones they already own.

Calling for action

Virgin Media O2 is now calling on the other mobile network operators to help put an end to this issue with three clear asks:

• “Introduce split contracts giving consumers greater choice over their mobile phone bills.
• “Automatically roll down customers onto an airtime only plan at the end of their minimum term to stop handset overpayments.
• “Inform customers once they’ve paid off the cost of the handset at the end of their contracts.
• “While, of course, it is up to an independent operator if and how they may choose to implement such changes, the process of making them could start tomorrow.”

Gareth Turpin, Chief Commercial Officer at Virgin Media O2, said: “We’re calling time on this half-a-billion-pound problem and urging the industry to step up for consumers and put an end to the smartphone swindle.

“As the only operator to have offered split contracts for over a decade; automatically roll down our direct customers once their device is paid for; and ensure customers receive clear handset payment information at the end of their contract, we want others to ensure consumers don’t overpay for their smartphones.

“During a cost-of-living crisis, and with older and low-income households most at risk, I’m asking the other operators to do the right thing.”

Virgin Media O2 urges customers to check their bills and ensure they’re not unknowingly overpaying for a phone they already own.

The provider has published four simple steps to help consumers save:

• “Split – your device and airtime wherever possible
• “Switch – if you are at risk of overpaying for your handset at the end of your contract and don’t have the option to split your bill, switch to another operator
• “Save – money by being aware of this issue and never overpaying for your handset
• “Share – tell friends and family if you think they might be paying for a phone they already own”