Three urged to stop overcharging customers at the end of a contract

Three has been urged to apply automatic discounts to contracts once the minimum term has expired and minimise the overpayments made by customers.

Most mobile phone contracts include an airtime and handset component for a minimum period of time – usually 24 months. Once this period has concluded, customers have in theory paid off the handset component.

However operators continue to charge the same amount until the customer decides they want a new handset or takes out a new, usually cheaper tariff.

Loyalty penalty

EE, O2 and Vodafone have promised to take action by February next year, but Three has so far refused to do so. Charity Citizens Advice says this amounts to a “loyalty penalty” affecting up to 210,000 subscribers. The average overpayment is between £10-13 a month, amounting to a maximum of £32.4 million a year.

 “It’s unacceptable that Three still thinks it can penalise its loyal customers by over a million pounds every month,” said Gillian Guy, Citzens Advice chief executive. “It cannot continue to bury its head in the sand.

“While Three claims in its adverts that ‘phones are good’, its customers may find their experience anything but, as their provider falls behind in refusing to end this practice. We’re pleased other mobile providers have said they’re going to act, but they must now follow through on their promises and put them into effect by early next year.

 “All eyes will be on Three to see if it puts this right and agrees to stamp out the loyalty penalty.”

Three view

Three's position is that an arbitrary discount isn't in the best interests of consumers and that it would prefer automatic end-of-service notifications that allow users to find the best contract for their needs.

A Three spokesperson said: “The current proposals are not in customers’ best interests. Three has some of the lowest prices and unmatched propositions on the market. We’ve always put customers first and continue to do so. Applying an arbitrary discount to tariffs will not effectively tackle what really matters - helping them to find a contract which is both best-suited to their needs and priced fairly. 

“As the leading campaigner for easy switching for the mobile industry, we are working hard to create a market where customers are engaged and happy, by pushing for easier switching, all handsets to be unlocked, end-of-contract notifications and best tariff advice.”

Earlier this year, Three was one of the signatories of an Ofcom pledge to put “fairness” at the heart of their business.

The “Fairness for Customers” commitments include a promise to give customers the most suitable deal for their needs and to provide clear information before, after and during a contract.

Vulnerable customers or those whose circumstances change will be treated fairly, while operators have also promised to fix any problems and allow customers to walk away from their contract if they do not receive the standard of service they have signed up for.

Additionally, all signatories have said they will not impose any barriers to customers who wish to change provider or their service.

Citizens Advice claims the ongoing imposition of the “loyalty penalty” means Three is in contradiction of this pledge.