Cloud storage companies promise fairer deal for consumers
Cloud storage users are set to benefit from fairer terms and conditions after action by the Competition and Markets Authority (CMA).
Following the CMA’s consumer law review of the sector, published today, 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 published a short guide to cloud storage for consumers.
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.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For more information see the CMA’s homepage on GOV.UK. For CMA updates, follow us on Twitter @CMAgovuk and LinkedIn.
- A summary of the changes to be made by Dixons Carphone plc trading as Dixons Carphone Group/Knowhow Cloud/Geeksquad Cloud (Dixons Carphone plc), JDI Backup Limited trading as JustCloud (JustCloud) and Livedrive Internet Ltd (Livedrive) has been published on the case page.
- The key pieces of consumer protection legislation relevant to this review and enforced by the CMA are: Part 2 of the Consumer Rights Act 2015 relating to unfair terms (and for contracts entered into before 1 October 2015 the Unfair Terms in Consumer Contracts Regulations 1999), and the Consumer Protection from Unfair Trading Regulations 2008.
- The CMA commissioned Ipsos MORI to carry out a consumer survey. This survey was carried out by Ipsos MORI between 7 and 29 January 2016 as part of its face-to-face omnibus survey, Capibus, which conducts interviews with 2,000 GB adults aged 15+ every week. It asked consumers who used cloud storage in a personal/private capacity a range of questions about their experience of cloud storage.
- The CMA has not made a finding on whether cloud storage providers’ terms and practices have breached consumer law. The CMA has not opened a formal investigation into any cloud storage provider on whether their practices could breach consumer law. Where there is evidence that practices breach consumer law this could lead to enforcement action by the CMA or other enforcers. Only a court can decide whether a particular term or practice breaches the law.
- Individuals have rights under the Consumer Rights Act and can ask a court to consider whether a term is unfair and unenforceable. The Citizens Advice consumer helpline is a telephone, email and online service offering advice to consumers where they have a problem with goods and services in the UK. If you have a cross-border complaint, you can go to www.econsumer.gov. The UK European Consumer Centre provides advice if you have a dispute with a trader in another EU country.
- Enquiries should be directed to Simon Belgard (simon.belgard@cma.gov.uk, 020 3738 6472).