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Punters lose backups in cloud storage biz spat

Data evaporates in credit card payments row

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Internet Security Threat Report 2014

Users relying on an online backup service have lost all their uploaded data after a major falling out between a cloud provider and one of its resellers.

UK-based Livedrive, which provides a cloud storage backend, ended its contract with US reseller Backify because, it claimed, the firm was "a fly-by-night operation" that didn't pay for its services. The American backup biz, which offered punters a free backup service using Livedrive's systems, has denied any wrongdoing and blames Livedrive for technical problems.

"Backify had a problem because they weren't paying the fees that were due to us," Livedrive MD Andrew Michael told The Register. "The problem started because they were paying us by credit card and their credit card was getting declined when they were adding new customers."

Next, Livedrive alleges, the recurring fees on existing services stopped coming in for a couple of days before Backify told Livedrive it wanted to end its contract and demanded a refund of any fees it had paid so far.

According to Michael, customers of Backify discovered that Livedrive was the technology provider behind the backup service and started to come to his biz with complaints. Livedrive offers "unlimited" online storage to resellers for 39 quid a month.

"[Customers] contacted us with stories of Backify charging their credit cards when they shouldn't be and we've done a bit more research about Backify and established that they are a bit dubious in their operations," he said.

"Because of that, and we very rarely do this, on this particular occasion we decided to send out an advisory to the end-users just to warn them really of what we'd found out and to make it clear that Livedrive is no longer providing the technology behind Backify's service."

A number of Reg readers forwarded to us Livedrive's warning email and it's also reproduced in full by a punter on Backify's Facebook Page.

Michael said that as a result of Livedrive's digging, he had reported Backify to a number of UK industry bodies, including one that deals with card processing and fraud, although he did not know if any formal investigation had started.

"When they failed to pay us for the services it quickly became obvious that they were a fly-by-night operation that wasn't really intending to provide their customers with any service and didn't really want to pay us either," he alleged.

Backify set up shop online around two months ago, and started out offering cloud storage of 512GB for free. Then Backify started informing customers that they would now have to pay for the service.

"We understand the frustration of all free account holders. But we hope you understand our situation as well. Providing so much free space to 50,000 people is not feasible for us anymore. We were in a situation where either the company would have to be shut down, or we would have to start charging the free account holders," Backify said on Facebook yesterday.

Michael said Livedrive knew that Backify had made the 512GB backup package available for free, but said that resellers were welcome to do so provided they did not harm the Livedrive brand.

"We've got no problem with that, but our terms do state that they must support our brand and not do anything that would give Livedrive a bad name, and they must support their customers in a professional way," Michael said. "And I think they weren't doing that, they were just giving it away for free and not really talking to any customers or supporting it properly which is not really what Livedrive's about."

Phone calls to the number on Backify's website went straight to an automated voicemail message. However, at the end of the day yesterday, a message appeared on the homepage claiming that the problems were all on Livedrive's side.

The message maintains that customers have had problems with their accounts in the last 10 days because of "an error in the Livedrive API":

Their tech support kept us saying that their "dev team" is working on it. But the "dev team" could not sort out the issue in 10 days.

Backify also blamed Livedrive for its credit cards getting declined:

Apart from this, their payment system failed on November 8. What that means is, we could not create any more new accounts, because their payment system kept declining all of our credit cards. Again, we contacted LiveDrive multiple times, but they could not sort out the issue in over 7 days.

When we contacted them again earlier today and protested with strong words about the delay in providing a solution to our problems, they responded by immediately terminating our reseller account and all the accounts we have created.

The post ends with an appeal to customers to ignore the emailed warning sent out by Livedrive:

As for the email they sent to our customers, we assure you that you do not have to worry about your credit cards being used fraudulently. We did not store your credit card numbers in our system. And about the payments that you have already made, we will refund all of them over the next few business days. You do not need to file any disputes or chargebacks with PayPal or your bank.

Meanwhile, Backify's customers have been told by Livedrive that their online backups are gone, leaving some pondering how exactly their data will be disposed. ®

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