The legal challenge, which is already gathering momentum, hinges on the issue of “loyalty penalties”, where customers continued paying for their mobile devices long after they had finished their minimum contract periods. If successful, it could cost the companies involved up to £1.14 billion, with the potential for affected customers to receive substantial compensation.
Allegations of Overcharging: The Basis of the Lawsuit
The lawsuit was initiated by consumer rights advocate Justin Gutmann, who claims that the four mobile giants have been taking advantage of their loyal customers. According to the lawsuit, many clients continued to pay the same monthly fees even after they had fully paid for their handsets. This, the claimants argue, resulted in overcharges, as these customers were paying more than new customers who only paid for airtime and data services.
According to the allegations, between October 1, 2015, and March 31, 2025, as many as 10.9 million customers could have been affected by these overcharging practices. This period of overcharging primarily applies to mobile phone contracts that bundled together both the cost of the handset and the airtime services such as calls, data, and texts.
The legal team representing the claimants contends that when the minimum term for these contracts ended, customers should have seen their payments reduced to reflect that the cost of their handsets had been fully paid off. However, mobile companies allegedly did not make these adjustments, meaning loyal clients were charged more than new customers, who typically only pay for airtime services. Gutmann, the lead consumer advocate, called it an “immoral practice” and stated that these companies “have been taking advantage of their loyal customers for far too long.”
Legal and Financial Impact: What It Means for Consumers
The lawsuit, which has been approved to proceed by the Competition Appeal Tribunal, is seeking a collective £1.14 billion in damages. If the claim succeeds, affected customers could each receive compensation of up to £104 per contract. This case has the potential to reshape how mobile phone contracts are structured in the UK, especially regarding the transparency of contract terms once the initial agreement expires.
According to the Competition Appeal Tribunal, customers who are eligible for compensation will automatically be included in the claim unless they opt out. It’s a move designed to make the legal process easier for consumers who may not be aware they were affected by the overcharging. However, the mobile operators are vigorously defending their actions, with spokespeople from O2, EE, and Vodafone all expressing their belief that there is no merit to the case.
An O2 spokesperson stated that the company “maintains that there is no merit to Mr Gutmann’s case for the remaining period and will continue to robustly defend our position.” Similarly, EE has also rejected the accusations, claiming that their “priority is, and always will be, to provide a great experience for our customers.”
Despite these denials, consumer rights advocates have pointed out that the case represents a significant opportunity for the public to challenge the fairness of long-term mobile phone contracts. The outcome of this legal battle will likely influence how other companies in the telecom sector approach their pricing and contract terms in the future.
