Five Red Flags When Reviewing A Data Room Vendor

Virtual data room (VDR) solutions are not an option anymore, if you want your deal to go smoothly and safely (or if you just need a secure place to store your sensitive data). In fact, the market is growing! Experts believe that it might reach a staggering $7.73 billion by 2030, and that’s a CAGR of 22.2% from 2025.

So let’s suppose you already know you do need one. But here comes a challenge: most data room providers market themselves as secure and “easy to use.” How do you know which is truly so? In reality, some VDRs might lack basic compliance standards or security features and offer unclear pricing. Or they might simply not be able to handle larger deals or multiple projects at once. 

Sure, choosing such a data room won’t necessarily break your deal, but it can slow it down and cause lots of other negative outcomes, from legal risks to loss of trust from deal participants. 

That’s why you should thoroughly compare virtual data rooms before purchasing. This article is for you to know what red flags to be aware of during the evaluation process.

Red Flag 1: Vague or Overly Complex Data Room Pricing

The first thing you’ll probably want to verify is that a provider is a) worth its money, and b) actually shares any information on how much you’re expected to pay for it. 

Here are some issues to look out for: 

• Hidden or unclear fees. If a provider doesn’t have any pricing details on the website, that’s definitely a red flag. Some virtual data rooms might not share concrete prices (especially if they have a quote-based approach), but they must at least show what subscription options are out there.
• Overcomplicated pricing model. Anything that is per-page, per-GB, or per-user billing will make your final check up to x10 times bigger than you expected by the end of the deal. Definitely not a surprise you’d want.

Red Flag 2: Slow or Unreliable Customer Support

Understanding whether a customer support will be able to help you out is an important part of the virtual data room comparison process. 

Here are some “warning” signs to avoid:

• Only one contact channel is available. Imagine that you suspect someone just accessed your financial report in the VDR. You want to get help ASAP, and there’s only an email channel available. Do you think you’ll get to keep your files secure in this situation? Look for at least three communication channels: email, online chat, and phone.
• The support team speaks only English. Sure, living in an English-speaking country might mean everyone speaks English. However, the best data room providers UK speak at least several languages so that all users are heard and helped out.

Red Flag 3: Weak or Outdated VDR Security Standards

This is the key to a good VDR. This is what it was made for, after all. 

You should be 100% sure your confidential data stays safe and protected from unwanted eyes. 

Here are two main things to watch for: 

• No proof of security certifications. A vendor should 100% mention ISO 27001, SOC 2, GDPR compliance, or similar standards on its website. If there’s no such information, most likely their security isn’t regularly audited. And you’re asked to trust them without any independent verification. Quite risky, agree?
• No detailed data room audit logs. A secure VDR must record who viewed, downloaded, or shared each file. If audit logs are missing or too basic, you lose control and can’t trace suspicious behavior. And that becomes a serious problem in case of data leaks or legal requests.

Red Flag 4: Limited Due Diligence Data Room Features

If you’re searching for a VDR to complete a deal or perform due diligence, it should have relevant features. You don’t want to end up with just secure cloud storage, agree?

Here are the main warning signals: 

• No tools to manage large volumes of data. When you download piles of information, it has to be easy to manage it. If there’s nothing like auto-indexing, drag-n-drop upload, folder labeling, or smart search, deal participants will probably get lost in a VDR long before the due diligence ends.
• Poor collaboration tools. For due diligence to be smooth and successful, the deal sides should have the ability to communicate at all times. If a virtual data room provider doesn’t offer Q&A or any other collaboration functionality, that might be difficult.

Red Flag 5: Lack of Scalability for Large Deals or Multiple Projects

Imagine you get offered to enter another, bigger deal right after the due diligence ends (successfully). Perfectly, you’d like to do business right where you were — with a VDR provider of your choice. But what if your new project is much bigger and involves more people? A vendor should be ready for that. 

Here are some warning signs:

• Performance drops as data grows. If uploading large folders takes too long and searches freeze, it means the system isn’t built for high-volume due diligence, and you’ll probably need to look for a new provider right in the middle of the deal. Not what you’d want, obviously.
• No multi-project management capabilities. Great data rooms allow you to create separate projects in one VDR space. This way, you’ll be able to start another project right away, and with fewer resources and money spent.

How to Properly Evaluate a VDR Vendor (Checklist)

Here is a quick checklist for you so that you know what to pay attention to when evaluating several virtual data room providers.

The choice of a perfect data room might seem challenging at first, but that’s only when you don’t know what to pay attention to. Knowing the five main red flags to watch out for, you’ll easily become a pro at evaluating VDR providers. Use the checklist to get the best virtual data room for your project or deal.