In context: The US government has sued Adobe over allegations that it deceived consumers by hiding early termination fees and purposely making product subscriptions difficult to cancel. In the complaint, filed by the Department of Justice on a referral from the FTC, Adobe is accused of harming consumers by enrolling them in its default, most lucrative subscription plan without clearly disclosing important plan terms.
It's alleged that Adobe fails to adequately disclose that cancelling one of its subscription in the first year can result in an early termination fee that can amount to hundreds of dollars. "In fact, if consumers cancel during that (annual) period, Adobe charges them 50% of the remaining payments for that one-year term, which could total hundreds of dollars," the FTC wrote.
It's also claimed that these fee disclosures were found in the fine print or required consumers to hover over tiny icons to see them. The fee is only explicitly disclosed when users try to cancel.
FTC takes action against Adobe and executives for hiding fees, preventing consumers from easily cancelling software subscriptions: https://t.co/tJ7J3tLxc4 /1
– FTC (@FTC) June 17, 2024
Even the act of cancelling a subscription with Adobe is highlighted as being unnecessarily arduous. There are reports of customers encountering resistance and delays from Adobe representatives, dropped calls and chats, having to navigate multiple web pages and popups, and dealing with multiple transfers. All of which can cause people to give up trying to cancel.
Adobe said in an SEC filing in December that it had been cooperating with the FTC since June 2022 after it received a subpoena from the agency that relates to its "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).
Adobe wrote at the time that "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."
Maninder Sawhney, Adobe's senior vice president of digital go-to-market and sales, and David Wadhwani, president of the company's digital media business, are also named in the lawsuit for overseeing the early termination policy.
Adobe has defended the charges brought against it. "Subscription services are convenient, flexible and cost-effective to allow users to choose the plan that best fits their needs, timeline and budget," wrote Chief Trust Officer Dana Rao. "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."
June isn't proving to be a good month for Adobe. The company was recently caught up in a controversy over its terms of use changes that appeared to allow the scanning of user-generated content. The company later clarified that it wouldn't be stealing people's work.
