Adobe To Pay $150 Million To Settle Lawsuit Over Deceptive Subscription Fees
Adobe has agree to pay $150 million to settle a case brought against it and two of its employees by the U.S. Department of Justice over accusations of hidden early termination fees and deceptive subscription practices. The settlement includes $75 million in civil penalties and another $75 million in free services. Adobe also agreed to a series of stipulations to prevent any confusion in the future.
The lawsuit was initiated by the Federal Trade Commission (FTC) back in June 2024 following an investigation that began in December 2023, with the agency claiming that Adobe's hidden early termination fees effectively "trapped customers into year-long subscriptions."
One of the main issues the FTC took exception with was how Adobe presented its subscription options. From the FTC's perspective, the monthly payment option for subscribers did not make it clear enough that users were agreeing to a year-long commitment, and that Adobe buried the early termination fee for cancelling early, saying it generally amounted to 50% of the remaining monthly payments.
"American consumers deserve the right to make informed choices when deciding where to spend their hard-earned money," Assistant Attorney General Brett A. Shumate, head of the Justice Department’s Civil Division, said in a statement regarding the settlement agreement. "The Justice Department will strongly oppose any attempt to harm Americans with deceptive and unfair business practices."
The lawsuit alleges that Adobe violated the Restore Online Shoppers' Confidence Act (ROSCA) by using fine print and "inconspicuous hyperlinks to hide important information" regarding subscription plans and "hefty" early termination fees. In addition, the lawsuit accuses Adobe of subjecting customers to "convoluted and inefficienct cancellation processors" littered with "unnecessary steps, delays, unsolicited offers, and warnings."
For its part, Adobe says it disagrees with the Department of Justice's viewpoints and denies any wrongdoing, but is happy to put the matter to rest by way of the settlement agreement.
"We are transparent with the terms and conditions of our subscription agreements, have a simple cancellation process and clearly disclose the details of our plans, which we carefully crafted to maximize value and benefits to our customers. In recent years, we have made our sign-up and cancellation processes even more streamlined and transparent," Adobe says.
As part of the settlement, for any free trial lasting longer than seven days, Adobe is required to remind customers before converting the trial into a paid subscription. Adobe is also required to offer easy ways to cancel subscriptions.
