Mobile phone companies are overcharging loyal customers by up to £38 a month, a shock report reveals today.
Analysis by Citizens Advice found customers of Vodafone, EE and Three who choose to stay on the same plan after their fixed deal ends do not get their bills cut - meaning they are paying an £22 a month extra for a handset they have already paid off.
The extra cost can be as much as £38 a month on for contracts with high-range handsets like the iPhone 7 128/256GB, the Galaxy S8 and the Xperia XZ Premium, it said.
Many consumers take out a contract with the cost of the new handset included in the overall price of the fixed term deal - most of which are paid off on a monthly basis over two years.
A separate study into costs and deals around the iPhone 8 said customers with a 256GB model could end up being overcharged by £46 a month on average.
Citizens Advice chief executive Gillian Guy said: "Some of the largest mobile phone providers are routinely overcharging their loyal customers.
"Mobile phones are now an essential part of modern life, but the way that the cost of handsets are hidden within some mobile phone contracts gives phone providers a way to exploit their customers.
"It is clearly unfair that some phone providers are charging loyal customers for handsets that they have already paid for.
"It's especially concerning that older customers are more likely to be stung by this sharp practice."
Digital Minister Matt Hancock said: "It's only right that mobile customers should be notified when they have paid off the price of their handset, and that their future bills should reflect this.
"I welcome Citizens Advice's call for better billing information for consumers, and hope that providers will now take the initiative by clearly separating the cost of handsets and tariffs in mobile contracts."
Nina Bibby, chief marketing officer of O2 - the only big British mobile phone firm not criticised in the study - said: "Forcing customers to continue to pay for a phone they already own not only hits their pockets but undermines trust and the reputation of the industry.
"We'd like to see the other operators review their position and follow our lead."