Mobile customers paying more than necessary for contracts

April 6, 2016

Lucy_2 (Custom)By Lucy Palmer-Richeson

Mobile phone providers have been accused of advising customers to take a contract that costs more than twice what they could be paying for their usage needs.

The accusation comes after Citizens Advice carried out a mystery shop on the UK’s leading mobile phone providers and found that there were huge variations in the contracts offered to the ‘average’ customer.

According to Citizens Advice, the prices of the monthly tariffs their mystery shoppers were recommended across the survey ranged from £7 to over £50.

Each mystery shopper supplied the mobile phone provider with the same information: they wanted a tariff for any kind of smart phone which met ‘average’ needs, around 250 minutes of calls, 250 texts and 200MB of data per month.

The average monthly cost of the contracts that were recommended was £23.16, whereas the most suitable tariff found by Citizens Advice was just £9.89.

Around 40% of the mystery shoppers were recommended contracts that had over 1000 minutes of call time, more than four times what they were looking for.

The shops visited in the study were Vodafone, EE, O2 and Three; mystery shops were also allocated to independent retailers. Citizens Advice found that there was a big problem with the selling process as there is such an emphasis on the handset. Often, the cost of the handset is combined with the cost of the contract into one monthly payment, but Citizens Advice say this makes it almost impossible for the customer to compare prices and to know exactly how much they are paying for the handset itself.

Gillian Guy, Chief Executive of Citizens Advice, said: ‘Mobile phone customers are being saddled with unnecessarily expensive contracts.

‘While we didn’t find evidence of mis-selling, sales pitches were focused overwhelmingly on phone brands, which meant not enough attention was paid to tariffs, which are very important.

‘The focus on handset brands mean people are essentially taking out loans on expensive phones but without being able to work out the details of the loan or whether it’s value for money.’

The report by Citizens Advice recommends that providers make the tariff and the handset separate costs for the sake of transparency. Some companies already do this, and Citizens Advice say they would like to see all mobile firms adopting this approach.

The report also recommends three more things: that price comparison websites allow consumers to search for tariffs based on their usage needs rather than on handset preference, that Ofcom get more involved in helping consumers understand how much their usage is and how to find a phone and plan that suit their needs, and finally that phone providers review the incentives their staff offer so that it can be assured that they are offering the correct tariff to suit the customer’s need.