Mobile phone users waste £8bn signing up for 'rip-off' contracts they don't need

Mobile phone users waste £8billion a year by signing up for contracts they do not need, an investigation claims.

Customers are also allegedly being hit by hidden charges that make networks a further £2.5billion a year.

Channel 4 investigators uncovered claims of sharp practices by High Street salesmen to rack up commission.

These included persuading parents to switch a child's pay-as-you-go service to a more costly monthly subscription. The elderly were also apparently targeted.

Whistleblowers told the documentary Dispatches they were paid fees of up to £10 for monthly contracts compared with £1.50 for top-up deals.

A former Carphone Warehouse worker said: 'I'd say that that was the number one thing that they were trying to do - get people off pre-pay and get them onto contract almost regardless of their usage.

'If you could get them on to contract, that was a result for you, your store and the company.'

Another Carphone Warehouse whistleblower claimed: 'There were handsets which were known to be unreliable but we still pushed them because we were going to make more money.'

One unnamed salesman admitted he tried to baffle customers with 'constant streams of different jargon'.

A former Phones 4U employee said that pushing customers toward more costly tariffs than they needed was common practice. 'The customer might only need 200 minutes, 200 texts,' he says.

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'The deal that they're offering might offer 800 minutes and 800 texts, so obviously it's going to be enough minutes and texts.

'But they used that to say that obviously you're not going to go over, you know what I mean. So that's what they always told us to offer them - high-ball them.'

A Phones 4U worker claimed that although the firm is independent of the network providers, it was happy to promote them if they pay 'the best amount of money'.

Dispatches highlighted the issue of operators charging customers extra for calling friends on different networks.

The so-called 'termination fees' can reach at least 5p a minute and are said to account for 15 per cent of the networks' revenues.

The cost to the companies of switching calls is said to be negligible.

Roger Godsiff, Labour MP for Birmingham Sparkbrook, said the Channel 4 investigation requires action. He added: 'Something has to be done in order to get a handle on the mobile phone industry, otherwise it will continue to run riot, totally unregulated, totally out of control and just making fortunes by screwing the customers.' Last year, the industry, which offers a bewildering 22,000 different mobile packtoages, fielded more consumer complaints against it than any other.

More than 34,000 people contacted Consumer Direct, a Government helpline, to complain about mobile phone contracts. The figure was 50 per cent up on 2006.

In the Dispatches programme, Rob Barnes of moneysupermarket.com, a consumer website, says: 'Everybody thinks I go in, I buy what I want buy. But it's not really as simple as that at all.

'The guys in the shop know exactly what they want to sell you and that's probably what you'll end up walking out of the store with.'

Carphone Warehouse said bonuses for selling on behalf of networks were shared by all staff and did not go to salesmen alone.

A spokesman said the firm 'passionately guards' its independence and did not sell faulty handsets. He said customers are advised to switch from contracts only if it is in their best interests.

Phones 4U also said it worked hard to maintain its impartiality. Its spokesman said commission fees were based on customer service levels and speed of transaction as much as the packages sold.

He said staff pointed customers toward deals that offered them the best value.

Dispatches: The Mobile Phone Rip- off goes out on Monday at 8pm.