In a major development for consumer rights, Britain's largest mobile network providers are confronting a colossal £3.2 billion (approximately $4.29 billion) collective lawsuit. The legal action accuses them of systematically overcharging millions of their most loyal customers.
London Tribunal Gives Green Light to Landmark Case
The lawsuit took a significant step forward after a London tribunal ruled on Friday, November 14, that a substantial part of the claim can proceed to trial. The Competition Appeal Tribunal (CAT) certified that claims for customer losses incurred from October 2015 onward are valid and will move forward. However, the tribunal dismissed claims from before this date, stating they were filed too late.
The companies implicated are some of the biggest names in the UK telecom sector: Vodafone, BT's EE, Telefonica's O2, and Hutchison's Three UK. This legal challenge comes even as Vodafone and Three UK had their massive $19 billion merger approved just last year.
What is the 'Loyalty Penalty' Allegation?
The core of the lawsuit alleges that these networks imposed a loyalty penalty on their customers. Lawyers representing British consumer champion Justin Gutmann argue that the networks engaged in a widespread practice of continuing to charge millions of customers for their mobile devices even after the devices had been fully paid off.
This situation typically arose after a customer's initial minimum contract period expired. Instead of reducing the monthly bill to reflect that the handset was now owned outright, the networks allegedly kept the payments at the same level. This effectively penalised customers who showed loyalty by staying with their provider instead of switching to a competitor once they were free to do so.
"The networks charged millions of British consumers who remained with the network after their minimum contract expired a 'loyal penalty,' by continuing to charge for mobile devices which had already been paid off," Gutmann's legal team contended.
Telecom Giants Prepare a Robust Defence
As expected, the accused mobile providers have strongly contested these allegations. Their legal representatives have argued that the lawsuit is fundamentally flawed, pointing out that it alleges anti-competitive behaviour in what they describe as an industry renowned for its competitiveness.
An EE spokesperson stated, "We do not accept the substantive allegations of the claim and intend to defend them robustly." Similarly, an O2 spokesperson welcomed the tribunal's decision to limit the scope of the claim by excluding pre-October 2015 losses. The spokesperson added, "We maintain that there is no merit to Mr Gutmann's case for the remaining period and will continue to robustly defend our position as it proceeds."
The outcome of this trial could have far-reaching consequences, not only for the UK telecom industry but also for how service providers around the world treat their long-term customers, setting a potential precedent against hidden loyalty penalties.
