The U.S. government on Monday sued Adobe, the maker of Photoshop and Acrobat, accusing the company of harming consumers by hiding expensive cancellation fees in its most popular subscription plans and making it difficult to cancel subscriptions.
in Complaint filed in federal court in San Jose, CaliforniaThe FTC said Adobe hid fees, which could amount to hundreds of dollars, and other important terms in fine print or behind text boxes or hyperlinks in its “monthly paid annually” subscription plans.
According to the lawsuit, Adobe calculates a cancellation fee of 50% of the remaining amount due if a consumer cancels during the first year.
The FTC also said Adobe forced subscribers who wanted to cancel online to navigate numerous pages unnecessarily, and that subscribers canceling by phone frequently experienced disconnections, were forced to repeat themselves to multiple representatives, and encountered “resistance and delays” from the representatives.
Two Adobe executives are also named as defendants: David Wadhwani, president of the company’s digital media business, and Maninder Sawhney, senior vice president of digital sales.
“Adobe locked customers into a year-long subscription with hidden cancellation fees and numerous cancellation hurdles,” FTC Consumer Protection Director Samuel Levine said in a statement. “Americans are tired of companies hiding secrets when they sign up and then putting obstacles in their way when they try to cancel.”
Adobe general counsel and chief trust officer Dana Rao said the San Jose-based company will refute the FTC’s allegations in court.
“Our subscription service is convenient, flexible and cost-effective, allowing users to choose the plan that best suits their needs, schedule and budget,” Rao said. “We make our subscription terms transparent and easy to cancel.”
Subscriptions accounted for $4.92 billion, or 95%, of Adobe’s $5.18 billion in revenue in the third quarter of 2017. Quarter ending March 1.
The FTC accused Adobe of violating the Restoring Consumer Trust Act, a 2010 federal law that prohibits merchants from charging fees, including automatic subscription renewals, unless they clearly disclose material terms and get informed consent from consumers.
Monday’s lawsuit seeks civil penalties, an injunction preventing further wrongdoing and other relief.
The case is United States v. Adobe Inc. et al., U.S. District Court, Northern District of California, Case No. 24-03630.
