A law firm acting on behalf of elderly BT customers who claim to have been overcharged for landlines is seeking up to £600 million from the telecoms company.
The class action lawsuit, filed by Mishcon de Reya at the Competition Appeal Tribunal (CAT), represents 2.3 million BT customers who it states are owed up to £500 each.
In response, BT said it had offered discounted landline and broadband packages for its elderly customers and that it "strongly disagreed" with the action being taken.
Why has a lawsuit been filed against BT?
The claim originates from a 2017 investigation by UK telecoms watchdog Ofcom that found that BT had been overcharging 2.3 million landline customers since 2009.
BT reduced the price of its landlines by £7 a month in response to the review but customers claim to have still not been compensated for previous charging.
Justin Le Patourel, founder of CALL (Collective Action on Landlines) who spent 13 years working for Ofcom, is leading the campaign against BT.
He said: “Ofcom made it very clear that BT had spent years overcharging landline customers but did not order it to repay the money it made from this.
“We think millions of BT’s most loyal landline customers could be entitled to compensation of up to £500 each, and the filing of this claim starts that process."
What did the Ofcom investigation discover?
Ofcom's investigation found that the UK's major landline providers had increased line rental chargers by between 28-41 percent at a time when the wholesale cost of providing landlines to consumers was falling.
The regulator criticised BT for raising prices and that customers, many of whom were elderly and had been with BT for decades, were being given "poor value" for money.
BT reduced its landline prices by £7 a month - £84 a year - in response to the review by Ofcom and argues the regulator didn't "explicitly accuse it (BT) of engaging in anti-competitive behaviour", state the BBC.
Ian Grant, an independent telecoms analyst, told the BBC: "It is especially poor that BT was overcharging customers who were mostly over 65, more than three-quarters of whom had never used a different provider, and for whom the telephone was their only communications link."
The lawsuit filed represents customers who purchased a BT landline contract only.
What has BT said in response to the lawsuit?
BT has strongly disagreed with the claim being brought forward by law firm Mishcon de Reya.
“We strongly disagree with the claim being brought against us,” a BT statement read.
“We take our responsibilities to older and more vulnerable customers very seriously and will defend ourselves against any claim that suggests otherwise.
“For many years we’ve offered discounted landline and broadband packages in what is a competitive market, and take pride in our work with elderly and vulnerable groups, as well as our work on the customer fairness agenda.
“We continue to offer a variety of packages to support our customers through the pandemic.”
Will BT customers get their compensation?
Mishcon de Reya and Mr Le Patourel clearly believe there is a case to be answered on behalf of millions of BT customers, who could be in line for compensation if they are successful.
“Which? has campaigned long and hard for an effective collective redress scheme, but with no claim under the new regime reaching a full trial, consumers have not yet had the results they need,” said Rocio Concha, director of policy and advocacy at consumer group Which?.
“If successful, this opt-out action would be welcomed by many BT customers who were found to have been historically overcharged for years, but saw no refund as a result.”