The U.S. government has launched a legal battle against Adobe, accusing the software giant of deceptive practices that harm consumers. At the heart of the lawsuit filed in a San Jose federal court is Adobe’s alleged concealment of hefty termination fees within its widely used subscription plans, alongside deliberate obstacles hindering cancellation.
According to the Federal Trade Commission (FTC), Adobe obscured crucial terms, including significant termination fees that could amount to hundreds of dollars, within the fine print of its “annual paid monthly” subscription model. These fees, the FTC claims, are calculated at 50% of remaining payments if subscribers cancel within their first year.
The FTC further criticized Adobe for complicating the cancellation process, describing a scenario where online cancellations require navigating through multiple pages unnecessarily. Phone cancellations, it alleged, often result in disconnections, repeated conversations with multiple representatives, and deliberate delays.
Named in the lawsuit are two Adobe executives, including David Wadhwani, president of the digital media business, and Maninder Sawhney, senior vice president in digital sales.
In response to the allegations, Adobe’s general counsel Dana Rao defended the company’s practices, asserting transparency in subscription terms and a straightforward cancellation procedure designed to offer flexibility and convenience to users.
Adobe, known for its Photoshop and Acrobat software, heavily relies on subscription revenues, which constituted 95% of its total revenue in the last quarter, amounting to $4.92 billion out of $5.18 billion.
The lawsuit, invoking the Restore Online Shoppers’ Confidence Act, seeks remedies including civil penalties, an injunction against further misconduct, and other corrective actions.
The case is set to unfold in the U.S. District Court for the Northern District of California under the docket number 24-03630.
As this legal drama unfolds, Adobe finds itself grappling not only with the allegations but also with the broader implications for subscription-based service providers under scrutiny for transparency and consumer rights.
