The US Federal Trade Commission has filed a lawsuit against Adobe Inc. (NASDAQ:ADBE), accusing the software giant of violating consumer protection laws by making it excessively difficult for users to cancel their subscriptions.
According to the FTC, Adobe encouraged users to opt for annual subscriptions to its creative software, such as Photoshop, without adequately disclosing that canceling within the first year could incur fees amounting to hundreds of dollars. The San Jose-based company also allegedly made the cancellation process cumbersome, requiring users to navigate through multiple online pages or deal with various customer service representatives.
“Adobe trapped customers into yearlong subscriptions through hidden early termination fees and numerous cancellation hurdles,” stated Samuel Levine, director of the FTC’s Bureau of Consumer Protection. The complaint was filed by the Justice Department in a federal court in California on behalf of the FTC, which oversees US consumer protection laws.
In response, Adobe declared its intention to contest the FTC’s allegations in court. “Our priority is to always ensure our customers have a positive experience,” said Dana Rao, the company’s general counsel. “We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process.”
Customers have frequently voiced complaints about the high costs associated with canceling Adobe subscriptions. Accessing Adobe’s suite of apps can exceed $700 annually for individual users. Subscribers must cancel within two weeks of purchase to receive a full refund; otherwise, they face a prorated penalty. In contrast, other digital services like Spotify Technology SA (NYSE:SPOT) and Netflix Inc. (NASDAQ:NFLX) do not charge a cancellation fee.
Regulators assert that Adobe’s management is aware that consumers are often confused by the terms of the agreement. The company’s subscription-pricing model allegedly incentivizes locking customers into long-term contracts and discourages cancellations.
The lawsuit claims Adobe’s practices breach a 2010 consumer protection law intended to safeguard online shoppers. This lawsuit follows a similar action by the FTC last year against Amazon.com Inc. (NASDAQ:AMZN) for allegedly deceiving consumers into signing up for its Prime membership service and making it difficult to cancel.
Adobe revealed in December that the FTC was investigating its subscription practices, with the FTC first requesting information on the matter in June 2022, according to the lawsuit.
Featured Image: Unsplash © emilybernal
