Free Cloud Storage: Threat to SMBs?

SMBs continue to use free cloud storage despite their data being at risk, jeopardizing medical and banking information, according to a new survey by Clutch.

The second annual edition of Clutch’s Small Business Cloud Storage Survey includes responses from nearly 300 SMBs who use cloud storage services. All of the businesses have between two and 500 employees.

Nearly 25 percent of SMBs continue to use free cloud storage despite warnings from industry experts, the survey said. Some 11 percent are storing banking information and 14 percent are storing medical records in free cloud storage.

“SMBs need to be informed about potential security issues, and understand that ‘out-of-the-box’ storage solutions are not fit to cover every business need,” said Alex Miller, senior analyst with Clutch. “This may be obvious to some dealing with heavily regulated data, such as health care, but not so obvious for others dealing with everyday files such as employee information, customer records or payment data.”

Storing sensitive data in free cloud storage is an “ill-advised and irresponsible business practice” since necessary security measures are often lacking, according to cloud experts interviewed for the report. Businesses that store banking or medical information are required to comply with the Payment Card Industry Data Security Standard (PCI) or Health Insurance Accountability and Portability Act (HIPAA).{ad}

“The primary difference between paid and free cloud storage is generally the amount of storage space available,” said Riley Panko, marketing analyst with Clutch. “However, paid cloud storage often offers options (like user authentication) that are important for cloud storage security. While free cloud storage is adequate for some companies, if a data breach will be devastating to your company, then you should absolutely stick with paid options.”

SMBs have high faith in the cloud’s security, with 87 percent of those surveyed saying that it is either very or somewhat secure. Despite this, security is still the top consideration for SMBs shopping for a cloud storage provider.

Overall, experts emphasize that a cloud storage service’s security doesn’t matter if its users aren’t trained properly. The weakest link is typically the user.

“I recently did some penetration testing for a financial company,” said Jacob Ackerman, CEO of SkyLink Data and Business Services, a hosting provider. “Our job was to determine weak points. We used a fictitious email address and I was able to get their CFO’s password with a spear phishing attempt within 15 minutes. So from that point forward, who cares how good your encryption is?”

SMBs are likely relying on free cloud storage mainly because they are satisfied with their storage space and do not believe that they need to upgrade, Panko said.

“However, a lack of knowledge regarding regulations means that businesses may not realize they are committing violations by storing sensitive data in their free cloud storage,” she said. “These actions can have serious repercussions, though.”