Mobile phone owners are spending a massive £530million each year towards phones they have already paid for, according to Virgin Media O2.
The telecoms giant says that 93% of people are completely unaware that the monthly payment they make may include money towards a handset they could have already paid off months or even years ago, and blame operators for sending out bills that make no reference to the cost of the phone being included in the plan.
Calling this 'the great smartphone swindle', Virgin Media O2 called upon other mobile network operators to help put an end to this issue, sparking a row with other providers, who say that Virgin O2's claims are misleading, according to This Is Money.
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Virgin Media O2 is calling for other providers to automatically roll customers onto an airtime-only plan at the end of their minimum term to stop handset overpayments, as well as telling them once they’ve paid off the cost of the phone.
The company goes on to claim that the problem hits older people and those on the lowest incomes hardest, with its study showing that 44% of those who have been out of contract for 12 months or more earn less than £15,000 per year. A further 60% and over-65 have been out of contract for a year or more, meaning they have potentially paid hundreds of pounds too much for their smartphone.
Virgin Media O2 has dubbed this “the great smartphone swindle” and said other mobile network operators should put an end to the issue. However, their comments have sparked a row with other firms including EE and Vodafone, who say the claims are misleading.
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.”
Ernest Doku, telecoms expert at Uswitch.com said: “Virgin Media O2’s research around handset overpayments highlights an issue we’ve been talking about for many years and is now more significant than ever. Households are facing inflation-linked mobile and broadband price hikes higher than we’ve seen in decades. Too many people are still overpaying on their mobile bills, and it’s very concerning that older people and those on the lowest incomes are disproportionately affected. More work needs to be done to raise consumer awareness around the contracts they sign up to and, importantly, their options when they come to an end.“
But rival phone operators refuted Virgin O2's claims, saying their plans were transparent. EE owner BT said: "Like Virgin Media O2 we offer split contracts with EE Flexpay, while providing all customers with clear end-of-contract notifications, including the best offer for them based on their usage."
Vodafone said: "Like Virgin Media O2, Vodafone customers on split contracts with Vodafone EVO will not see any further handset charges once their 0% finance deal ends and will therefore never overpay for a phone. All handset customers on legacy contracts are contacted repeatedly when their contract comes to an end, and after three months - if they haven't moved onto a new contract already - we automatically apply a monthly £5 discount."
A Three spokesperson said: "Three already offers split contracts where customers can take out a loan to pay for their device, which is separate to their monthly airtime payments. The customer owns their device from when they purchase it and once their device loan is paid off, the customer isn't required to make any further payments towards the cost of their device."
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