Three, EE and Vodafone are all overcharging customers once their contracts have been paid off, leaving consumers out of pocket by as much as £38 per month.
Citizens Advice says the three major networks continue to charge for handsets after the cost has been paid off at the end of a contract.
Find out how to get round this with our handy guide to avoiding being overcharged by your network.
“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.
The consumer rights group said that on average, consumers were paying £22 a month extra at the end of their contract. This rises to £38 for high–end devices such as Samsung’s Galaxy S Series and Apple’s iPhones.
Worryingly, owners of a 256GB iPhone could end up paying a massive £46 extra a month. Citizens Advice said that 36% of mobile phone owners remain on their contract beyond its end date, paying for a phone which they already own outright.
Those over 65 are most at risk of paying extra, with 23% keeping the same contract more than 12 months after its end.
Splitting the cost of phones and tariffs is becoming increasingly common across the mobile industry. Sky Mobile and O2 drop the price of their monthly plans when the cost of a phone has been paid off.
Three and Vodafone defended their position, saying they contacted customers reaching the end of their term, encouraging them to change tariff.
EE claimed that offering separate pricing for tariffs and devices could leave consumers worse off.