Citizens Advice calls for Three to stop ripping off its loyal customers

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Citizens Advice calls for Three to stop ripping off its loyal customers

Category : Consumer Issues

Friday 20 September 2019

Customers of Three Mobile who are being penalised for their loyalty will continue to be overcharged by between £1.5 and £2.7 million a month, reveals Citizens Advice.

The charity is calling for Three to join the other major mobile providers, who agreed to voluntary commitments in July to better protect loyal customers.

These measures, which will reduce many loyal customers’ bills, are due to come into effect by February.

But Three have so far refused to commit to taking similar action, which Citizens Advice says will result in some of its loyal customers continuing to be overcharged.

The charity has long campaigned to end the loyalty penalty – the difference between what loyal and new consumers pay for the same service.

In the mobile sector this is because customers continue to be charged for the handset at the end of a minimum contract period when they’ve already paid it off.

Using publicly available data, Citizens Advice found:

  • Between 154,000 and 210,000 Three customers are paying the loyalty penalty each month

  • On average, a Three customer paying the loyalty penalty is being penalised by £10 to £13 each month

  • Over the course of a year, loyal Three customers are being overcharged by between £18 million and £32.4 million

While some Three customers benefit from being out-of-contract, Citizens Advice is concerned by the number of its customers who are still being penalised when their contract ends.

Citizens Advice is calling for Three to commit to stop overcharging all their out-of-contract customers.

Three signed up to Ofcom’s fairness commitments earlier in the year, promising the regulator that it would give customers a fair deal. By continuing to rip off customers paying a loyalty penalty, Citizens Advice argues they have broken this promise. The charity warns that, if this breach continues, Ofcom must make sure Three are standing by their commitment.

The loyalty penalty isn’t just a problem in the mobile industry. Citizens Advice submitted a super-complaint across five markets (mobile, broadband, home insurance, mortgages and savings) in September last year. The charity had found that loyal customers were being penalised by around £4 billion every year simply for staying with their provider.

The charity is also calling for details of the concrete action regulators will be taking to tackle the loyalty penalty across the other four markets by the end of the year.

Gillian Guy, Chief Executive of Citizens Advice, said:

“It’s unacceptable that Three still thinks it can penalise its loyal customers by over a million pounds every month. 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.”

Stu from Merseyside, who called the Citizens Advice Consumer Service for help, said:

“I’ve been with Three for over 10 years and, across my family, have five contracts with them. Each time one of the contracts ends I always seem to be paying more.

“I finished paying off one of my handsets and was shocked to find out Three were still charging me for it. I now make sure I always sign up to a new contract when my old one ends to try and get a better deal, as they never just tell you about their deals or discounts that are available.”

“I think they should be rewarding loyal customers like me. I shouldn’t have to keep an eye on my bills to make sure I am not being overcharged.”