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Are you wasting money on a mobile you already own?

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It’s always a great feeling to know you’ve paid off a bill. But what if you were still being charged every month for something you’d already paid off? Well that could be happening with your mobile phone contract…

New research for our Unlock Better Mobile Deals campaign shows that we’re collectively wasting a shocking £355m every year by shelling out for handsets we’ve already paid off.

That’s because nearly half of the people in our survey didn’t switch straight away when they came to the end of their contract. On average they’re paying an extra £92 each towards handsets they already own.

Vodafone, EE and Three

So how is this happening? Well, most contracts combine the cost of the tariff and the handset. But it’s not normally split out like that, so people don’t know how much each element costs or when they’ve finished paying for their phone.

O2, Virgin Media, Tesco Mobile and Utility Warehouse have tariffs where the handset and airtime costs are separate, while giffgaff has never bundled the handset in. Whereas Vodafone, EE and Three customers still continue to be charged one bundled price.

For example, a contract with O2 Refresh for an iPhone 6 costs £49 a month for 5GB of data and unlimited minutes and texts. Of this, O2 is clear that the handset part of the bill is £25, meaning that you’ll only pay £24 per month when the contract’s over.

On a similar plan with Vodafone (4GB of data and unlimited minutes and texts) it costs £48.50 a month. However, that price doesn’t change once you come to the end of your contract and you’ve finished paying off the cost of the handset.

Overpaying for your mobile phone

If you don’t switch as soon as your contract has ended it could end up costing you around £22 for every month you go over. That’s what happened to Jeremy:

‘I was nearing the end of a two year contract that included an iPhone, so I rang Vodafone to ask about upgrading to a new handset. I was told an upgrade would be available nearer to the end of the contract – but when the contract finished, Vodafone didn’t tell me or offer an upgrade.

‘Worse, they continued to charge me £45 a month for a phone I had already paid off. I only discovered that I was overpaying when my daughter mentioned that her bill was only £15.’

We think people are being misled and, as a result, are collectively paying millions of pounds each year for a phone they’ve paid off. We’re calling on all providers to separate out the cost of the handset so you don’t continue to pay after the contract comes to an end. You shouldn’t be handing over money for nothing.

Have you ever continued paying the same amount to your mobile provider even though you’d come to the end of your contract?

Alan Figueira says:
13 August 2016

I have a Sony z3
Unlimited everything…calls, texts,data…
I Pay £25 per month on ee
I want a Sony z5 but the cheapest available is unlimited calls, texts and 4gb which will cost me 27:99 per month plus 384.99 for the handset.
So I lose unlimited data and pay more per month..
Better off buying the handset offline paying less per month and having unlimited everything.
So making a statement of people losing money is incorrect by not upgrading.
Using your brain saves you money.
And yes I want unlimited everything and want to pay the least amount i can.
And not be tied into a 24 month contract

Suzanne Mc says:
30 July 2017

Is there anything being done about this? My wife is in the same boat. Contract was due to end Dec2016, phoned in Sept2016 to change and talked about going to SIM only deal, but was told that it was too early and Vodafone would “make contact nearer the time”. Vodafone never made contact, wife assumed that she had moved to SIM only (now that phone had been paid for), but on checking bill recently still paying £41 per month!!

Well the same has just happened. My wife’s phone contract ended Feb 17.
We have been with Vodafone for some 20 years now and every time the contract ends, they call to pester for an upgrade. Not this time. No call to the primary account holder (me) nor the phone user.
We have paid £22 +VAT for over 10 months and they refuse to refund the overcharge.
I calculate this as £11.00 per month + VAT for the difference between a sim only charge and the sim+phone charge. So I am out by £132.00!!

I did query this and received a £15 refund, but was then advised there was a £56 disconnection charge – on a contract that expired 10 months ago!

I understand that the contract is a 24month contract which we agreed to pay via direct debit. At the end of the period, the contract ceases and so should the service unless you renew. Not with Vodafone, they continue charging for the phone and service until YOU cancel it.

So what’s the 24 month contract all about.

So two points, firstly you agree to a 24 month term after which the payments should stop. By continuing to take payments by direct debit after the agreed term is against the direct debit guarantee – in the same way as taking more than agreed.
They have the responsibility to contact the user to renew their contract either by upgrade or on a service only basis.
There are no other services operated like that. Car HP – any HP – insurance, even credit card and loan agreements have an agreed term. They never go over.
How many insurances don’t pay because the policy was not renewed.

This should be treated like any other credit facility (which it is) and regulated by the FSA.
This is very similar to a mis-sold policy where the exact terms of the contract are unclear.
Its about time this practise was stopped.

I agree that this practice should be stopped but in the meantime the best solution could be to switch to a SIM-only contract. Vodafone can’t charge me for anything other than usage. If I want a new phone I can buy that separately, but the old one still works fine, and it’s not locked so I can move to another company.

many cannot afford the phone they desire so the way to get the One is by taking out a contract that supplies the phone of their desire That’s why many have very expensive phones that do not need or make full use of they have a contract that includes their wanted phone

So how can to get a refund for the extra charge on the handset, when the mobile provider refuses to refund?

PPI scandal with the banks is nothing compared to the millions of people over charged by mobile phone companies after there fixed term contracts with there mobile phones had expired.

Nothing is free when you go into a 24 month contract and now I see there is now a 36 month contract. If your tariff is £50 per month times that by 12 that’s £600 per year then you have tax to pay on top and then they charged you 30% Apr on top it works out a small fortune each year but this is the amount they charge for one year but your locked in for 3 years. Some companies can change your price plan as when you sign up one of there agreements they have a paragraph about mid term pricing and they can alter how much you paying. The mobile phone is not free your paying for it but not for 1 year but 3.

I’ve always though sim-only contracts made much more sense. Using those means you have to buy phones separately, but if you buy sim-free phones, then you also get the advantage of not being locked in to any one network.

Absolutely agree Derek.

The cost of new phones is not hidden so it is up to those taking out contracts to decide whether it is worth paying through the nose just to have the latest model.

Buster says:
12 August 2020

This practice should be against the law . If I bought furniture on credit monthly once I’d payed for it that’s mine and I don’t have to pay anymore. If the company carried on asking for payment they would be in big trouble and would have to refund all the extra payments they’d had. It’s fraud plane and simple

Not Happy with Vodafone says:
30 December 2020

Agreed, fraudulent practice on the part of the mobile phone company. Vodafone are just rolling over a contract after the 24month period without changing the tariff, when the bill clearly included the cost of the handset. Now that it has been paid off there is no justification for continuing to charge the same amount – this should be illegal.

Not only are they charging customers for a handset that has already been paid off – they are charging and collecting VAT – where no product has been provided!! This is against tax laws. Under VAT laws, regardless of whether single ‘bundled’ price is charged, VAT is considered in light of each supply of goods/services. In this case, the mobile phone provider is making “multiple” supplies – a supply of the handset and the supply of telecommunication services. Once the handset is paid off, they are collecting VAT from customers illegally.

I have been paying Vodafone for a handset or mobile phone I finished paying for two years ago !! Almost two years worth of direct debit payments have been taken from my bank account amounting to around £45 a month since I finished paying for my old phone which I am still using ! I had no idea I was still paying for it ! Vodafone are refusing to give me a refund saying that I should have notified them that I wished to change to a SIM only contract . They also stated that they provide other services with the original contract that I failed to end . I asked them to tell me what these other services were that would cost in the region of £45 per month !! There must be a legal solution to this surely…..unfair contract terms which benefits Vodafone if the customer isn’t fully
aware of the actions required at the end of the agreement. I’m really upset and feel robbed ….it shouldn’t be allowed to happen !!

It’s disappointing that Vodafone is still doing this, Michael. It might be worth raising a complaint. A friend managed to get a partial refund from O2 years ago with little effort, in similar circumstances to yours. If you contact the company and ask for your PAC code (which allows you to transfer your number to another provider) they might be helpful.

On a SIM-only contract, Vodafone have recently given me a 25% discount and double the data allowance after I told them that I could move to EE now that they now cover where I live.

Best of luck.

Thanks for your reply Wavechange . I did contact Vodafone and made a complaint but they said it’s up to me to contact them to change the contract to ” SIM only ” when it finishes . I did get a communication from them either by email or in My Vodafone App , a while ago , saying that I was eligible for an upgrade which I declined and clicked on a box selecting SIM only ! They don’t have a record of this apparently. It’s really an unfair practice not to itemize the large amount paid for the handset/phone separately and subsequently reduce the direct debit amount once the payments for the phone have been completed. It’s not in the customer’s or consumer’s best interests and it means Vodafone can turn around and say that the amount they are charging covers all their other services that they provide…. when they know full well that the majority of the charge is for the phone handset which has already been paid for , in full , by an unsuspecting customer like me !

The new SIM only contract Vodafone have set me up on yesterday now costs me just under £12 per month . The difference between £45 per month and £12 being £33 . Multiply £33 by 24 months of overpaying on my old contact comes to slightly less than £800 of overpayments which Vodafone are refusing to refund ! If there are any lawyers willing to take on my case on a no win no fee basis then I would love to hear from you !

Hi Michael – Here is post by Patrick Steen, who used to run Which? Conversation: https://conversation.which.co.uk/technology/mobile-phone-contract-handset-bought-ee-three-vodafone/#comment-1407460

If you are keen to take on the company, inexpensive legal advice is available from Which? Legal, and you don’t have to be a Which? member. It might be worth ringing 191 and telling Vodafone that you intend to take action. Like me saying I intend to leave, it might produce action.

Best of luck and please let us know how you get on.

Thanks wavechange for your help and I will certainly let you know if I can get any further with this deliberately unclear practice.