As cloud storage has widely spread, there have been growing concerns from the UK authorities about whether consumer rights are effectively protected. New guidelines for consumers and a new checklist for industry bring fresh obligations to providers, who should follow the new developments closely.

The Competition and Markets Authority (CMA) recently launched a review of compliance with consumer law in the cloud storage industry. In this context, it is critical for companies offering cloud storage services to keep abreast of the ongoing consumer-friendly policy of the CMA.

As many will know, cloud storage enables users to store data such as photos, music and documents online, accessible from anywhere.

The issue the CMA aimed to address in its review is the extent to which services contracts respect consumer rights. The reports points out that even if customers benefit from a wide range of cloud services, they do not fully trust providers and worry that stored data may not be secured.

Furthermore, assessment of several services contracts revealed their lack of transparency and the existence of unfair provisions that could potentially harm both customers and the market. For instance, many contracts include terms whereby providers can suspend, terminate, vary or renew the contract without giving consumers adequate notice, reasons or rights to challenge the decision. In some others, providers simply limit or waive their liability or prevent any legal action under the consumer’s own jurisdiction and law. Imagine a situation where you have been storing photos, and documents for years and for free and one day, the provider decides to charge you a high price in order to retain and access the data. As you have been a long time user of the service, you would be coerced to accept this unilateral variation in order to ensure that your data remain secured and that the provider does not use them improperly.

According to the CMA, such practices represent a threat to both customers and the market and must be corrected in order to prevent poor practice becoming widespread in the industry.

To assist providers in the improvement of their terms and practices, the CMA published an ‘open letter’ and a ‘checklist’ where it highlights behavior that may lead to sanctions, as well as measures to be undertaken to avoid any legal action. Meanwhile, the CMA released guidelines for customers, helping them be aware of their rights and assisting their choice of the right cloud storage service.

Following the release of the review, Dixons Carphons plc, JustCloud and Livedrive have committed to adjust their practices to the CMA’s requirements. Other may follow.

For further information about the CMA checklist, by following this link.