The US government on Monday sued Photoshop and Acrobat maker Adobe, accusing the San Jose, California-based software company and two of its executives of harming consumers by hiding high cancellation fees for its most popular subscription plan and making it difficult to cancel subscriptions.
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In a lawsuit filed by the U.S. Department of Justice in response to a notice from the U.S. Federal Trade Commission (FTC) in the U.S. Federal Court for the Northern District of California in San Jose (Case No. 5:24-cv-03630), Adobe and two executives, David Wadhwani, president of digital media, and Maninder Sawhney, senior vice president of digital sales, are accused of luring consumers into a one-year subscription through “hidden prepayment penalties and multiple cancellation barriers,” but consumers were not given adequate information that canceling a subscription could cost hundreds of dollars in the first year. A statement from the supervisory authority says,
Myanmar army: VPN app on cell phones threatens to take hostagesAdobe has moved primarily to a subscription model since 2012, letting consumers pay for software access on a recurring basis. Such subscriptions account for the bulk of the company’s revenue.
Hidden fees and difficult cancellations
According to the complaint, if the customer cancels payment in the first year, Adobe calculates a prepayment penalty as 50 percent of the remaining payment. In turn, the fees and other important terms and conditions for the “annual paid monthly subscription” are hidden on the company’s website in small print or behind text boxes and hyperlinks. Therefore, many consumers are not aware that the “annual paid monthly” plan requires continuing the subscription for a year. Although Adobe is aware of consumers’ problems with its subscription plan, the company continues its practice, the FTC complains.
Adobe’s termination process is also designed to make it more difficult for consumers to terminate. According to the US trade regulator, Adobe forces customers who want to cancel online to unnecessarily click through several pages, while customers who cancel over the phone face “opposition and delays from Adobe employees.”
“Americans are tired of companies handing them the ball when they sign contracts and standing in their way when they try to cancel. The FTC will continue working to protect Americans from these unfair business practices,” Samuel Levin, director of the FTC’s Bureau of Consumer Protection, said in the regulator’s statement.
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