Millions overcharged after their phone contracts end

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It alleges people with Vodafone contracts are paying up to £38 a month for handsets, with EE and Three charging up to £34 a month, on top of charges for data, calls and texts.

The report found that those who lose out the most are customers with high-range handsets, such as the new iPhone, while the age bracket more likely to be affected is the over-65 group, because of the higher propensity to stay with existing contracts compared with younger customers.

One in three customers on "handset-inclusive" mobile phone contracts continue to pay beyond the minimum term of their contract, research by Citizens Advice found.

By remaining on the contract after it ends, the customer should see their bill drop to £25 a month - roughly the cost of an equivalent "sim-only" contract.

"Mobile phones are now an essential part of modern life, but the way that the cost of handsets are hidden within some contracts gives phone providers a way to exploit their customers", Citizens Advice CEO, Gillian Guy said.

Minister for Digital 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". It's especially concerning that older customers are more likely to be stung by this sharp practice'.

Splitting the cost of phones and tariffs is becoming increasingly common across the mobile industry.

Three told the BBC that it makes the end date very clear when customers take out the contract (assuming people can remember a small piece of information after two years), while Vodafone claimed to contact customers towards the end of their contracts to discuss new options - including upgrading their handset.

"We appreciate any feedback to help us improve our processes and are exploring new ways to ensure our customers can get the most out of their mobile phones at a competitive price".

EE said: "Separating phone and tariff doesn't always represent the best deal for consumers".

A Vodafone UK spokeswoman said: "Wherever possible, we contact customers nearing the end of their contract to offer them a range of options".

Are you paying for a phone you already own?

"All of our customers can move to a SIM-Only plan as early as 45 days before the end of their contract, and our customers can also take advantage of the annual upgrades included in our 4GEE Max plans, allowing our customers to upgrade their device every 12 months at no additional cost", the spokesperson added.

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