Cloud storage contracts can be misleading, says Competition watchdog

Cloud storage services offer terms and contracts that can be changed any time, without notice or for any reason, said the Competitions and Markets Authority.

Contract terms and practices followed by Cloud storage services are unfair to consumers and could breach consumer protection law, it added.

Admitting that customers have found Cloud storages to be valuable and that they offer many benefits for consumers, the  Competitions and Markets Authority (CMA) said that Cloud storage providers use too much discretion to change terms of contracts and vary prices without giving adequate notice to consumers. The CMA also found that these providers, including the likes of Dropbox, Google Cloud and Apple iCloud, also renew contracts automatically without giving customers the opportunity to cancel such contracts after renewal.

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“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,” said Nisha Arora, Senior Director of Consumer at CMA.

In an open letter to cloud storage providers, the CMA advised them to review and revise their contract terms to ensure that they are not in breach of consumer laws. It has also made it clear that if any contractual terms or discretionary practices of cloud service providers are found unfair, they will not be legally binding on consumers.

Citing the Consumer Rights Act 2015, the CMA asked could storage providers to ensure that consumers are provided the right information before they sign new contracts and also to ensure that their advertising should reflect the true price of the service that consumers have to pay.

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Following the very public admonishing by the CMA, three Cloud storage providers, namely Dixons Carphone, JustCloud and Livedrive, have committed to offer fairer contracts to consumers which has been appreciated by the CMA. “We welcome the fact that a number of companies have already agreed to change their terms, and expect to see improvements from other companies,” said Arora.

Back in April, a research by Citizens Advise Bureau revealed that an average mobile contract is priced 130 per cent more than what it ought to be. The study found that average monthly tariff offered by operators is £23.16 which in ideal scenario shouldn't exceed £9.89. As per data collected by mystery shoppers, for a package consisting of 250 minutes of calls, 250 texts and 200MB of monthly data, EE contracts ranged from £10 to £50.82, Vodafone between £9.99 and £49.99, O2 between £11.35 to £46 and Three between £10 to £40.

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A study conducted by the Advertising Standards Authority (ASA) in January also revealed that the way your home broadband contract is being priced is misleading and may cost a lot more than you think it will. Revealed by, the research found that only 23 per cent of participants were able to correctly guess the monthly cost of a broadband contract after viewing an ad. An astounding 81 per cent couldn't calculate the total cost of a contract either and 74 per cent believed that information regarding ongoing costs after introductory periods were very unclear.

Thanks to the research, the Advertising Standards Authority (ASA) will ask broadband service providers to come clean about hidden costs, not to separate line rental cost from monthly cost and let consumers know about up-front costs. ASA will also release new recommendations on broadband pricing by 30 May 2016.

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