Adobe Sued Over Deceptive “Annual, Paid Monthly” Plan, Cancellation Process
The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) have filed a lawsuit against Adobe Inc. (NASDAQ: ADBE), alleging that the software giant has engaged in deceptive subscription practices. The lawsuit claims that Adobe uses hidden fees and complex cancellation processes to lock consumers into long-term subscription plans without proper disclosure.
The complaint, filed by the United States acting on FTC’s notification, accuses Adobe of enrolling consumers into its most lucrative subscription plan, the “Annual, Paid Monthly” (APM) plan, without adequately disclosing critical terms. The government asserts that Adobe fails to clearly inform consumers about the year-long commitment and the hefty early termination fee (ETF) associated with the APM plan. These fees can amount to hundreds of dollars and are only revealed when subscribers attempt to cancel, effectively trapping them in unwanted subscriptions.
Adobe shifted from a perpetual licensing model to a subscription-based model in 2012, significantly increasing its recurring revenues. By 2023, subscription-based revenue accounted for $14.22 billion of Adobe’s $19.41 billion total annual revenue. Adobe offers various subscription plans, including “Monthly,” “Annual Paid Monthly,” and “Annual Prepaid.” However, the APM plan is often pre-selected during the subscription process, making it the default choice for many users.
The complaint details how Adobe’s enrollment process hides the terms of the APM plan in fine print and behind optional textboxes and hyperlinks. Key information about the year-long commitment and the ETF is not clearly presented, and consumers often do not see these terms until they attempt to cancel.
“Consumers navigating the enrollment flow do not see the additional text contained in the tooltip unless they hover over or click the icon,” states the complaint.
The lawsuit also addresses Adobe’s convoluted cancellation process. Consumers attempting to cancel their subscriptions face numerous obstacles, including multiple web pages, re-entering passwords, and navigating through retention offers. Many consumers have reported that their cancellation requests were not processed, resulting in continued charges.
One consumer complaint noted, “I have corresponded with Adobe on the phone and via their chat support over 3 times in the last few months to try and cancel my membership. Each time I try to cancel, there is a rigorous negotiation and instead of allowing the user to cancel their account, they offer 2 months at no charge.”
The DOJ and FTC are seeking injunctive relief, civil penalties, and equitable monetary relief to put an end to Adobe’s alleged unlawful conduct. The complaint charges Adobe with violating the Restore Online Shoppers’ Confidence Act (ROSCA), which requires clear and conspicuous disclosures of subscription terms and simple cancellation mechanisms.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
