The Federal Trade Commission announced it is filing a lawsuit against Adobe for allegedly "deceiving consumers by hiding the early termination fee for its most popular subscription plan and making it difficult for consumers to cancel their subscriptions."
The lawsuit filed Monday in federal court accuses Adobe of inadequately disclosing that canceling the plan in the first year could cost hundreds of dollars. The FTC said that Adobe switched to a subscription-based model in 2012 for its popular products, including Photoshop and Acrobat. Since then, most of the company's revenue has been from subscriptions, the FTC said.
Adobe said it will fight the allegations in court.
“Subscription services are convenient, flexible and cost effective to allow users to choose the plan that best fits their needs, timeline and budget. Our priority is to always ensure our customers have a positive experience. We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process. We will refute the FTC’s claims in court," said Dana Rao, Adobe general counsel and chief trust officer, in a statement.
But the FTC said that Adobe made it hard for consumers to cancel products they no longer desire.
One example the FTC cites is Adobe's "early termination fee." The FTC said that customers who select Adobe's "annual paid monthly" plan are charged 50% of the remaining fees if they cancel the plan before the year is over.
The FTC also claims that when customers attempt to cancel a subscription on the company’s website, they have been forced to navigate numerous pages. The FTC added that when customers contact Adobe's customer service to cancel a subscription, they "encounter resistance and delay from Adobe representatives."
“Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel. The FTC will continue working to protect Americans from these illegal business practices.”
The Federal Trade Commission has proposed making it easier to cancel subscriptions. In 2023, the FTC proposed a “click to cancel” rule for things like gym memberships, newspapers, food delivery and other services that charge weekly or monthly fees.
Among the rule changes, the FTC would require businesses to make it at least as easy to cancel a subscription as it was to start it. Essentially, if you can sign up for a membership with one click, it would be just that simple to cancel the membership.
