Adobe Faces Lawsuit Over Hidden Fees and Subscription Cancellation Issues

The Justice Department and the Federal Trade Commission (FTC) have initiated a civil enforcement action against Adobe Inc. and two of its executives. The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges that Adobe and its executives, Maninder Sawhney and David Wadhwani, violated the Restore Online Shoppers’ Confidence Act (ROSCA). They are accused of imposing hidden “Early Termination Fees” and creating a complex cancellation process for online subscribers.

Adobe Inc., known for its design and productivity software, offers subscriptions through its website. The lawsuit claims that Adobe used fine print and inconspicuous links to hide important information about its subscription plans. This included a significant Early Termination Fee charged to customers who canceled their subscriptions. The government alleges that Adobe profited from this hidden fee and used it to mislead consumers about the actual costs of their subscriptions. This fee acted as a powerful retention tool, surprising customers when they attempted to cancel.

The complaint also alleges that Adobe violated ROSCA by not providing a straightforward mechanism for canceling subscriptions. Instead, Adobe allegedly made the cancellation process complex and inefficient, with unnecessary steps, delays, and unsolicited offers. This process was designed to deter customers from canceling their subscriptions.

The lawsuit seeks unspecified amounts for consumer redress and monetary civil penalties from Adobe and its executives. Additionally, it seeks a permanent injunction to prevent future violations.

“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 M. Boynton. He emphasized that the enforcement of ROSCA would continue against such misconduct.

U.S. Attorney Ismail J. Ramsey for the Northern District of California stated, “Companies that sell goods and services on the internet have a responsibility to clearly and prominently disclose material information to consumers.” He noted that companies exploiting consumer confusion for profit would be held accountable.

FTC’s Director Samuel Levine of the Bureau of Consumer Protection criticized Adobe’s practices, stating, “Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles.” He assured that the FTC would continue protecting Americans from such illegal practices.

The case is being handled by Trial Attorneys Francisco L. Unger, Amber M. Charles, Zachary L. Cowan, and Wesline N. Manuelpillai of the Civil Division’s Consumer Protection Branch, along with Assistant Director Zachary A. Dietert. They are assisted by Assistant U.S. Attorney David M. DeVito for the Northern District of California and FTC staff.

Image: Adobe

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