In a significant legal action, the U.S. government has filed a lawsuit against Adobe, the maker of popular software like Photoshop and Acrobat, accusing the company of deceiving customers by hiding fees and making it difficult to cancel subscriptions. The lawsuit also names two Adobe executives, David Wadhwani, President of Digital Media, and Maninder Sawhney, Senior Vice President of Digital Sales, as defendants.
The Federal Trade Commission (FTC) alleges that Adobe violated the Restore Online Shoppers’ Confidence Act, a 2010 federal law requiring clear disclosure of material terms and obtaining informed consent from customers before imposing charges, including automatic subscription renewals. According to the complaint, Adobe hides hefty termination fees and important terms in its “annual paid monthly” subscription plan within the fine print, text boxes, and hyperlinks. When consumers attempt to cancel within the first year, they face early termination fees amounting to 50% of the remaining payments.
Consumers trying to cancel their Adobe subscriptions encounter numerous obstacles. Online cancellations require navigating multiple pages, while phone cancellations often result in disconnections, repeated explanations to various representatives, and resistance from customer service. These practices have led to unexpected charges for many users, particularly freelancers, small business owners, and students who rely on Adobe’s tools but have limited budgets.
Adobe has denied any wrongdoing and plans to contest the FTC’s claims in court. Dana Rao, Adobe’s General Counsel and Chief Trust Officer, stated, “We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process.” Rao also emphasized the benefits of subscription services, describing them as convenient, flexible, and cost-effective.
Subscriptions are crucial to Adobe’s revenue, accounting for $4.92 billion, or 95%, of its $5.18 billion revenue for the quarter ending March 1. The company’s shift to a subscription model in 2012 marked a significant change from its previous one-time purchase model, driving consistent revenue but also leading to customer dissatisfaction over cancellation difficulties and hidden fees.