O2, Vodafone, EE and Three are facing a huge class action lawsuit in the UK over claims millions of loyal customers have been overcharged.
Named the loyalty penalty claim, the case alleges that companies were charging long-standing customers for their handsets beyond their contractual term.
It claims up to 10.9 million phone contracts were affected between 1 October 2015 and 31 March this year.
The lawsuit seeks damages of at least £1.141bn. If it is successful, every person affected could be entitled to up to £104 for each contract they took out with the operators.
Many customers are expected to have claims against more than one mobile operator.
Follow the latest consumer news here
All qualifying customers will be automatically included in the claim for free unless they follow specific steps to opt out.
The legal challenge, brought by consumer rights expert Justin Gutmann, was approved to go to trial by the Competition Appeal Tribunal.
It is being brought on behalf of consumers who purchased mobile contracts made up of a mobile phone and airtime services such as data, minutes and calls.
When these contracts are agreed, the price during the minimum term of the contract includes both the mobile and the use of airtime services.
The claim alleges that operators failed to reduce the amount charged once the minimum contractual term expired, despite the fact that customers had already paid for their handsets.
This resulted in existing customers being charged more than a new customer would be if they were just paying for airtime services.
“For far too long the phone companies have been taking advantage of their loyal customers,” Gutmann said. “That’s why it’s time to stop the immoral practice of loyalty penalties.”
Originally, Gutmann wanted the claim to go back to contracts starting in 2007, but the Competition Appeal Tribunal reduced the scope to contracts taken out between October 2015 and 31 March 2025.
Read more from Money:
‘This was final straw with Asda…’
‘My husband died before getting his state pension. Am I entitled to any of it?’
Top chef on how much you should tip
An O2 spokesperson told Money: “At this early point in the proceedings, we welcome the Competition Appeal Tribunal’s ruling that the majority of the claim has no basis to be brought, significantly reducing its scope.
“We maintain that there is no merit to Mr Gutmann’s case for the remaining period and will continue to robustly defend our position as it proceeds.”
An EE spokesperson said: “We do not accept the substantive allegations of the claim. Our priority is, and always will be, to provide a great experience for our customers.”
VodafoneThree said: “We are disappointed with the Tribunal’s decision to certify the claim. We will review the judgment in detail before considering next steps. We will continue to robustly defend this claim.”
Money has contacted the other mobile network operators for comment.
