Mobile phone customers ‘saddled with unnecessarily expensive contracts’
1 April 2016
Mobile phone customers risk being "saddled" with contracts costing hundreds of pounds more than they need to, research for Citizens Advice has found.
Citizens Advice commissioned a mystery shop among mobile phone providers and found major variations on contracts offered to customers.
The monthly cost of tariffs recommended to the mystery shoppers across the whole survey ranged from £7 to more than £50.
The average monthly tariffs recommended by phone staff were £23.16 – more than double the price of the most suitable tariff found by the Citizens Advice research at £9.89.
Over the course of a two-year contract, this could mean a customer is paying £318.48 more than they need to.
Mystery shoppers provided the same information to all sales staff and did not express a preference for the kind of phone.
They said they wanted a tariff for any kind of smartphone which met “average” needs, around 250 minutes of calls, 250 texts and 200MB of data per month. Some 350 mystery shops were carried out, including some in store, some over the telephone and some via web chat.
Small differences were found in the average cost depending on the shopping channel used – the average monthly cost of tariffs recommended in store was £23.01, compared to £23.09 over the telephone and £24.01 on web chat.
Citizens Advice said 40% of mystery shoppers were recommended tariffs with 1,000 or more inclusive minutes of calls – at least four times more than was needed by the customer.
Mystery shops were carried out among Vodafone, EE, O2 and Three and mystery shops were also allocated to independent retailers.
Researchers also carried out internet research to establish which tariffs most closely matched the needs of the consumer in its scenario. This provided a baseline from which to assess whether sales staff were directing the mystery shoppers to the most suitable tariff based on the information they were given about their needs.
Citizens Advice said the cost of tariffs offered to customers by staff varied significantly. They ranged from between £10 and £50.82 for EE, making a difference of £40.82. This means over the course of a two-year contract, consumers taking out the most expensive tariff recommended would pay nearly £980 more than those taking out the least expensive recommended tariff.
For Vodafone, the cost varied between £9.99 and £49.99, making a £40 difference, for O2 the cost ranged from £11.35 to £46.00, making a difference of £34.65 and for Three the cost varied between £10 and £40, making a difference of £30.
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 focussed 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.
“Mobile phones have become an essential product for the majority of people and with many contracts now lasting for years it’s crucial more is done to help consumers get the best deal for them.”
The report said some firms already split out the cost of the handset and the tariff – and called for this approach to be rolled out across the industry.
The report also recommended that price comparison websites and phone retailers should give customers the option to search for deals based on consumption rather than handset preference.
Photo from Lauren Hurley / PA Wire