More than 3 million BT customers could receive up to £400 each as a class action lawsuit begins seeking £1.3bn in compensation over claims the telecoms group allegedly overcharged for landline services.

The legal action has been brought by Justin Le Patourel, a former executive of the watchdog Ofcom, and alleges that BT used its dominant position in the market to charge “excessive” amounts for about 3 million landline customers, many of them elderly and low-income households.

Le Patourel launched the claim three years ago after looking into an Ofcom investigation into BT in 2017.

Ofcom’s investigation, which looked at BT’s practices from 2015, found that people who only had a landline telephone were “getting poor value for money in a market that is not serving them well enough”.

BT cut landline prices the following year for 1 million mostly elderly customers by £7 a month but did not offer them compensation for overcharging in the past.

Le Patourel, who formed Collective Action on Land Lines (Call) to gather customers in a class action against BT, estimates that affected customers could get £300 to £400 in compensation depending on the length of their contracts.

“We believe BT has been systematically overcharging millions of customers over many years, and those customers could be owed hundreds of pounds each,” Le Patourel said. “Time really is of the essence. More than 40% of our claimants are aged over 70, and more than 150 of them are dying every day. It really is vital that BT should refund every one of them as soon as possible.”

The class action automatically includes all affected customers – including those who are now deceased, after BT gave consent to an amendment to the claim – unless they actively choose to opt out.

Le Patourel claims that more than 500,000 landline-only customers have already died.

A spokesperson for BT said: “This claim relates to a technical landline pricing issue which was resolved by Ofcom in 2017. We do not accept that our pricing was anti-competitive back then, and as such are committed to robustly defending our position at trial. We take our responsibilities to customers very seriously and are dedicated to keeping our customers connected, while helping those who need it most.”

However, when Le Patourel took his case to the Competition Appeal Tribunal in 2021 seeking permission to take BT to trial, the three-member tribunal was unanimous in ruling that the claim showed more than enough merit to be pursued.

“We conclude that there is a real prospect of success for this claim,” the tribunal concluded in its 42-page ruling at the time.