The US government sued Adobe on Monday, accusing the Photoshop and Acrobat maker of harming consumers by hiding high termination fees on its most popular subscription plan and making it difficult to cancel subscriptions.
In a complaint filed in federal court in San Jose, Calif., the Federal Trade Commission said Adobe buries the fees, which sometimes run into the hundreds of dollars, and other important terms in its “annual, monthly payment” subscription plan. ” in small print, or behind text boxes and hyperlinks.
According to the complaint, Adobe calculates early cancellation fees as 50 percent of remaining payments when consumers cancel in the first year.
The FTC also said that Adobe forces subscribers who want to cancel online to navigate unnecessarily through numerous pages, while those who cancel by phone are often disconnected, forced to repeat with multiple representatives and they encounter “resistance and delay” from these representatives.
Two Adobe executives are also charged: David Wadhwani, president of the digital media business, and Maninder Sawhney, senior vice president of digital sales.
“Adobe trapped customers into one-year subscriptions through hidden early cancellation fees and numerous cancellation hurdles,” said Samuel Levine, director of the FTC's Office of Consumer Protection. “Americans are tired of companies hiding the ball during sign-up and then throwing up roadblocks when they try to cancel.”
Dana Rao, Adobe's general counsel and director of trust, said the San Jose-based company will refute the FTC's claims in court.
“Subscription services are convenient, flexible and cost-effective to allow users to choose the plan that best suits their needs, schedule and budget,” Rao said. “We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process.”
Subscriptions accounted for $4.92 billion, or 95 percent, of Adobe's $5.18 billion in revenue in the quarter ended March 1.
The FTC accused Adobe of violating the Restoring Online Shoppers Trust Act, a 2010 federal law that prohibits merchants from imposing charges, including automatic subscription renewals, unless they clearly disclose material terms and obtain informed consent of the customers.
Monday's lawsuit seeks civil penalties, an injunction against further crimes and other remedies.
The case is US v. Adobe Inc et al, US District Court, Northern District of California, No. 24-03630.
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