Around 4m people in the UK have been charged for mobile phones they already own, paying a total of £490m extra on their last contracts.

According to research from Citizens Advice, the three culprits are the UK’s biggest mobile phone networks – EE, Three, and Vodafone – which regularly charge people extra for handsets that have already been paid off.

“Mobiles are a key part of everyday life for millions of people of all ages. The fact that 4m people have been overcharged for phones they already own is shocking and, at worst, exploitative,” Rohit Makol, head of mobile at Compare the Market. “Citizens Advice’s investigation should be ringing alarm bells for any EE, Three or Vodafone customer to review their contract and switch if they’re out of their contract and overpaying.

“Mobile phone customers can save money by changing providers or reviewing their tariff. This is likely to be a significant amount if you are being wrongly charged for a handset that has already been paid off when your contract ended.”

Citizens Advice analysed over 700 bundled contracts and found that consumers would pay more in 73 per cent of cases than buying a phone outright. The issue here is that 55 per cent of consumers assume bundled contracts are the cheaper option due to a confusion over bundled contracts.

Furthermore, the research found that customers are overcharged £22 a month, rising to as much as £38 for high-end devices like an iPhone or Samsung Galaxy. Meanwhile, older people are twice as likely to be charged for phone they already own, costing them £264 on average.

“Charging for phones that have already been paid off does nothing but damage customer trust and the reputation of the industry,” said Nina Bibby, O2 CMO. “O2 is the only network out of the big four that gives customers full transparency and control over their monthly bills by splitting the air time and device costs on our custom plans. We’d like to see the other operators follow our lead.”

As a result of its findings, Citizens Advice is calling on the three major providers to separate the pricing of their mobile services and phones to provide more transparency about how they are charging their customers.

“It is unacceptable that mobile providers are knowingly overcharging customers for phones they already own,” said Gillian Guy, chief executive at Citizens Advice. “We’ve heard a lot of talk from government and the regulator but now we need action. Other companies have already stopped doing this so we’re looking for these three major providers to follow suit.

“In the meantime, consumers should check their phone bills to see if they can save money with a SIM-only contract or upgrade to a new phone.”