In brief: Do you find that Adobe's subscriptions are too hard to cancel? The FTC thinks this is the case, which is why the agency is investigating the software giant and looks set to hit the company with a massive fine for these practices.
Adobe wrote in a filing with the SEC that it may be forced to hand over significant monetary costs or penalties due to an FTC investigation into its software subscription cancellation policies.
Adobe said it has been cooperating with the FTC since June 2022 after it received a subpoena from the agency that relates to Adobe's "disclosure and subscription cancellation practices relative to the Restore Online Shoppers' Confidence Act."
The Act covers several rules that services must abide by. These include never making the cancellation process "drawn-out," cancelling accounts after requests have been submitted, promptly honoring a request that complies with any policy to make refunds or allow cancellations, and not forcing customers to cancel by phone if they only signed up online. Other sections of the Act require operators to make the cancellation process simple and accept the request immediately (I.e., no multiple "Are you sure?" prompts).
The Act also states that sellers must ask cancelling customers if they want to hear new offers (before showing them) and provide an annual reminder to consumers enrolled in negative option programs involving anything other than physical goods before their subs are automatically renewed.
Adobe is one of those companies with a reputation for making its subscription cancellation process so difficult that some people give up trying. We've heard reports of it forcing customers to call on the phone, which puts many people off, and charging early termination fees.
Adobe confirmed in the filing that in November 2023, the FTC "asserted that they had the authority to enter into consent negotiations to determine if a settlement regarding their investigation of these issues could be reached."
Adobe defends its actions, naturally. "We believe our practices comply with the law and are currently engaging in discussion with FTC staff," the company wrote. But it still added a warning that defending itself or paying the fine would have a "material impact on our financial results and operations."
Back in March, the FTC proposed a 'Click to Cancel' provision that would require companies to make the process of cancelling recurring subscriptions as simple as signing up for them. The proposal is part of the agency's ongoing review of its 1973 Negative Option Rule, which it uses to combat unfair or deceptive practices related to subscriptions, memberships, and other recurring-payment programs.
The FTC has used the Restore Online Shoppers' Confidence Act to fine companies over their subscription practices before. In June, it sued Amazon for allegedly violating the same act, claiming it knowingly tricks people into signing up for Prime through the use of Dark Patterns - a reference to the number of options at the checkout suggesting people sign up for automatically renewing Prime subscriptions.
