The US government sued Adobe on Monday, accusing the maker of Photoshop and Acrobat of harming consumers by hiding high termination fees in its most popular subscription plan and making it difficult to cancel subscriptions.
In a lawsuit filed in federal court in San Jose, California, the Federal Trade Commission said Adobe buries fees, sometimes running into the hundreds of dollars, and other important terms in its “yearly paid monthly” subscription plan in fine print, or behind text boxes and hyperlinks. .
According to the complaint, Adobe calculates early termination 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 through numerous pages unnecessarily, while those who cancel by phone are often disconnected, forced to repeat themselves to multiple representatives and encounter “resistance and delay” from those representatives.
Two Adobe executives were also charged: David Wadhwani, president of the digital media business, and Maninder Sawhney, senior vice president of digital sales.
“Adobe has trapped customers into one-year subscriptions through hidden early termination fees and numerous cancellation barriers,” said Samuel Levine, director of the FTC’s Office of Consumer Protection. “Americans are tired of companies hiding the ball during subscription registration and then putting up roadblocks when they try to cancel.”
Dana Rao, Adobe’s general counsel and chief commissioner, said the San Jose-based company will challenge the FTC’s claims in court.
“Subscription services are convenient, flexible and cost-effective to allow customers to choose the plan that best suits their needs, schedule and budget,” said Rao. “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 Online Consumer Confidence Act, a 2010 federal law that prohibits merchants from charging fees, including automatic subscription renewals, unless they clearly disclose material terms and obtain informed consent from customers.
Monday’s lawsuit seeks civil penalties, an injunction against further wrongdoing and other remedies.
The case is USA v. Adobe Inc et al., U.S. District Court, Northern District of California, No. 24-03630.
© Thomson Reuters 2024
