Steps that Adobe allegedly took to make it hard to cancel online subscriptions weren’t just annoying — they were illegal, according to the U.S. government.
The U.S. Justice Department and the FTC filed a lawsuit Monday against Adobe and two of its execs, alleging that they imposed a hidden early termination fee on millions of online subscribers and that Adobe forced subscribers to navigate “a complex and challenging cancellation process designed to deter them from cancelling subscriptions they no longer wanted.” A redacted copy of the complaint is at this link.
Adobe said it will fight the lawsuit. “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,” Dana Rao, Adobe’s general counsel and chief trust officer, said in a statement Monday. “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.”
The lawsuit concerns Adobe’s online subscriptions for design and productivity software applications via its website, adobe.com. The suit, filed Monday in the U.S. District Court for the Northern District of California, also names as defendants David Wadhwani, Adobe’s president of digital media, and Maninder Sawhney, Adobe’s SVP of digital go-to-market and sales. The U.S. government’s suit accuses Adobe and the two execs of violating the Restore Online Shoppers’ Confidence Act (ROSCA).
According to the complaint, Adobe “systematically violated ROSCA” by using fine print and “inconspicuous hyperlinks” to hide important information about the subscription plans — including info about a significant early termination fees that customers may be charged when they cancel their subscriptions. The complaint alleges that for several years, Adobe “has profited from this hidden fee, misleading consumers about the true costs of a subscription and ambushing them with the fee when they try to cancel, wielding the fee as a powerful retention tool,” per the government’s lawsuit.
The complaint alleges that Adobe has further violated ROSCA by failing to provide consumers with a simple mechanism to cancel recurring, online subscriptions. Instead, the lawsuit alleges, Adobe has protected its subscription revenues by thwarting subscribers’ attempts to cancel, subjecting them to a “convoluted and inefficient cancellation process” filled with unnecessary steps, delays, unsolicited offers and warnings.
The lawsuit seeks unspecified money to compensate consumers who were allegedly affected by the activity and civil fines on the defendants, as well as a permanent injunction to prohibit them from engaging in future violations.
As the government’s lawsuit notes, Adobe’s subscription revenue has nearly doubled in recent years. In 2019, Adobe earned $7.71 billion in subscription-based revenue. By 2023, subscription-based revenue accounted for $14.22 billion of the company’s $19.41 billion in total annual revenue.
“The Justice Department is committed to stopping companies and their executives from preying on consumers who sign up for online subscriptions by hiding key terms and making cancellation an obstacle course,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the DOJ’s Civil Division. “We will continue to enforce ROSCA against those who engage in such misconduct. No company, whether it is a small business or a member of the Fortune 500 like Adobe, is above the law.”
