CMA warns cloud providers over breach of UK consumer law

Major cloud providers accused of altering contract terms in breach of law

The UK's top competition watchdog issued warnings to several major cloud providers over concerns that the firms might potentially be in breach of UK consumer law.

The Competition and Markets Authority (CMA), pointed to several areas of concern with cloud contract terms and practices, specifically the ability of service providers to change the service or terms of the contract at any time, for any reason and without notice.

But the CMA was also concerned about service providers suspending or terminating contracts giving no notice or reason, and automatically renewing a contract at the end of a fixed term without giving notice or withdrawal rights.

In 2015, when the CMA decided to launch an official review of compliance with consumer law in the cloud storage market, it said it had been prompted to launch the investigation after consumer complaints about the price and service changes for cloud storage.

Consumer complaints to the CMA included practices and terms that breached consumer law, such as ''significant'' price hikes coupled with drastic cuts in cloud storage capacity after contracts had been agreed.

Dixons Carphone, JustCloud, and Livedrive were found to ''have some contract terms and practices which could be in breach of consumer law,'' the CMA said, ''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; and automatically renew a contract at the end of a fixed term without giving notice or withdrawal rights.''

Nisha Arora, the CMA's senior director, consumer, said, ''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.'' added Arora.