image credit: the adobe blog
On Monday, the U.S. government sued Adobe for hiding high termination fees in its most popular membership plan and making cancellations difficult.
The Federal Trade Commission complained in San Jose, California, that Adobe hides fees, which can reach hundreds of dollars, and other critical provisions in its “annual paid monthly” subscription plan in the fine print or behind textboxes and hyperlinks.
Adobe charges 50% of outstanding payments for first-year cancellations, according to the complaint.
Adobe executives David Wadhwani, president of digital media business, and Maninder Sawhney, senior vice president of digital sales, are defendants.
“Adobe trapped customers into year-long subscriptions through hidden early termination fees and many cancellation hurdles,” said FTC consumer protection division director Samuel Levine. “Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel.”
Adobe general counsel and chief trust officer Dana Rao said the San Jose business will fight the FTC in court.
“Subscription services are convenient, flexible and cost-effective, allowing users to choose the plan that best fits their needs, timeline and budget,” added Rao.
Adobe’s $5.18 billion revenue in the quarter ending March 1 was 95% subscriptions, or $4.92 billion.
The FTC accused Adobe of breaking the federal Restore Online Shoppers’ Confidence Act of 2010, which forbids merchants from charging, including for automatic subscription renewals, without properly disclosing material terms and obtaining informed consent.
The complaint filed Monday seeks civil damages, an injunction against future violations, and other remedies.
U.S. v. Adobe Inc. et al., No. 24-03630, Northern District of California.
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