THE LOYALTY PENALTY CLAIM AGAINST MOBILE OPERATORS

Charles Lyndon and consumer rights champion Justin Gutmann have launched proceedings against the UK’s four main mobile network operators: Three, Vodafone, EE and O2. Mr Gutmann alleges that the mobile network operators have abused their dominant market positions by overcharging loyal customers who did not immediately terminate their handset and airtime services contracts at the end of their minimum contractual terms. Essentially, it is claimed that customers’ charges were not reduced appropriately once their handsets had been paid for in full, causing those customers to suffer loss.

The proceedings seek compensation of approximately £3 billion on behalf of between 2.3 million and 4.8 million contract customers. 

Mr Justin Gutmann, the proposed class representative in the action, is a consumer rights champion with extensive experience in consumer issues and market dominance within the mobile phone and network provider industries. A class representative is a person who acts on behalf of all members of the class. He is responsible for making sure their interests are put first throughout the conduct of the claim. Mr Gutmann’s main responsibilities will be to act in the best interest of the class and to act fairly and adequately, in order to obtain the best possible outcome for the class members. Once approved by the Competition Appeal Tribunal, Mr Gutmann will conduct the claim against the mobile network operators on behalf of all class members, except for those who opt-out.

In ‘opt-out’ class proceedings such as this, the claims are brought on behalf of a defined group of persons, but those persons do not have to be personally identified, nor do they have to opt-in to the proceedings.

Those persons within the class who are domiciled in the UK are automatically included in the ‘opt-out’ class proceedings unless they follow specific steps to opt-out. This proposed collective claim is brought on an opt-out basis for individuals domiciled in the UK as of a date that is yet to be determined by the Tribunal.

“I am delighted to be the Proposed Class Representative in these claims against the UK mobile network operators Vodafone, EE, Three and O2. For years, these companies have abused their positions of dominance to the detriment of their loyal customers by needlessly overcharging in the form of loyalty penalties. I look forward to seeking justice on behalf of the several million mobile handset customers who have ever entered into a Combined Handset and Airtime Contract and been wrongfully overcharged as a result”

Justin Gutmann

Mr Gutmann alleges that the UK mobile network operators have used their position in the UK retail market for mobile telecommunications services to impose overpayments (“Loyalty Penalties”) on customers who did not immediately terminate their contracts for a handset and airtime services (a “Combined Handset and Airtime Contract”) at the end of the minimum contract term (“Minimum Term”).

A Combined Handset and Airtime Contract is a contract whereby an individual purchases a mobile telephone (“Handset”) and agrees to make regular payments calculated to cover the cost of the Handset and other services such as text messages, calls and data (“Airtime Services”) over a Minimum Term.  

During the Minimum Term of a Combined Handset and Airtime Contract, the individual must continue to make regular monthly payments unless they choose to terminate the contract by paying an early termination fee.  

At the end of the Minimum Term, if the customer does not cancel the Combined Handset and Airtime Contract, they will continue to make regular payments at the prevailing rate, even though the Minimum Term has expired, and the Handset is fully paid for. As a result, individuals who do not terminate their Combined Handset and Airtime Contract immediately at the end of the Minimum Term will overpay for the Airtime Services, as their monthly charges will not have been reduced to the relevant SIM-only price despite the Handset having already been paid for over the Minimum Term.