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Three under attack from Citizens Advice over loyalty penalty

Emma Lunn
Written By:
Emma Lunn

Three is the only mobile firm not to sign a voluntary commitment to stop ripping off loyal customers.

Three customers are being ripped off by between £1.5m and £2.7m a month – about £10 to £13 each – according to Citizens Advice.

The network is the only one out of the major providers which hasn’t agreed to voluntary commitments, published in July, to better protect loyal customers.

Ofcom agreed with Virgin Mobile, Tesco Mobile, O2, Vodafone and EE that the networks would take varying measures to reduce customers’ bills when their contract ends.

These measures, which will reduce many customers’ bills, are due to come into effect by February. But Three has so far refused to commit to taking similar action, which Citizens Advice says will result in some of its loyal customers being 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 usually 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 £18m and £32.4m.

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

Broken promises

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 it has broken this promise. The charity warns that, if this breach continues, Ofcom must make sure Three stands by its commitment.

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.”

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.”