This issue will occur if you, or someone you are sharing with, has enabled the Apple iCloud Drive on their computer.
iCloud Drive does not play nicely with other cloud storage applications, so it’s important that when using iCloud Drive, the Sync folder is moved to a location that is not being actively scanned by iCloud.
To resolve this you or the person using iCloud, will need to change a setting in iCloud Drive to ensure iCloud does not create these .icloud files.
1. Go to Apple System Preferences on the computer
– Click the Apple icon top left corner of screen
– Select System Preferences
2. From System Preferences select iCloud
– From the iCloud list select Options beside iCloud Drive
3. In the iCloud Drive Options deselect “uncheck” Optimize Mac Storage
– At this point, iCloud should then download the actual files back into the Sync folder (and get rid of the .icloud files)