Cloud storage companies promise fairer deal for consumers

Following the CMA’s consumer law review of the sector, published recently, Dixons Carphone plc, JustCloud and Livedrive have committed to provide fairer terms for their cloud storage customers. The CMA is continuing to work with a number of other companies to make their terms and practices fairer.

Cloud storage is a system for storing data such as music, films and photographs on remote servers. The CMA found that around 3 in 10 British adults use cloud storage in a personal capacity. The majority currently benefit from free services that come with their devices such as smartphones and tablets and consumers are generally satisfied with their services.

However, it also heard some concerns and found that businesses have some contract terms and practices which could be in breach of consumer law, including those giving companies the ability to:

• change the service or terms of the contract at any time, for any reason and without notice
• suspend or terminate the contract without notice for any reason
• automatically renew a contract at the end of a fixed term without giving notice or withdrawal rights

The CMA welcomes the commitments to changing these terms and practices made by Dixons Carphone plc, JustCloud and Livedrive. The CMA is talking to other companies in the sector and expects them to make similar improvements. Companies which do not comply with consumer law risk enforcement action.

In addition to its report, the CMA is today also publishing an open letter for businesses, which advises them to:

• review their terms to make sure they are fair for consumers
• ensure that consumers get necessary information before they buy

The CMA has also published a 60-second summary and 2 infographics on choosing the right cloud storage service and what terms and conditions to look out for.

Top tips include:

• checking that the service meets your needs before you buy
• keeping an eye out for changes to the service
• challenging terms in the contract if you think they are unfair

Nisha Arora, CMA Senior Director, Consumer, said:

Cloud storage offers a convenient means of keeping family photos, favourite music and films and important documents safe, and accessing them quickly from any device.

Our review found that people find these services really valuable. However, we also heard some complaints resulting from unfair terms in contracts. If left unchanged, these terms could result in people losing access to their treasured possessions or facing unexpected charges.

In this rapidly-developing market, it’s important that we act now to ensure that businesses comply with the law and that consumers’ trust in these valuable services is maintained. We welcome the fact that a number of companies have already agreed to change their terms, and expect to see improvements from other companies.