FTC sues Adobe for allegedly hiding fees, making it tough to cancel subscriptions
Federal regulator claims Photoshop maker does not adequately disclose early termination fees that can cost customers 'hundreds of dollars'
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The Federal Trade Commission sued Adobe and two of its executives Thursday, claiming the Photoshop maker hides early termination fees on its most popular subscription and makes it difficult for customers to cancel.
The federal regulator said in its complaint that Adobe does not adequately disclose the fees, which are calculated as 50% of the remaining payments when customers cancel in their first year. According to the FTC, those fees can reach hundreds of dollars.
Signage on Adobe headquarters in San Jose, California, US, on Thursday, Nov. 30, 2023. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| ADBE | ADOBE INC. | 518.74 | -6.57 | -1.25% |
Adobe, Inc.
The FTC also said Adobe forces subscribers who want to cancel online to navigate unnecessarily through numerous pages, while those canceling by phone are often disconnected, are forced to repeat themselves to multiple representatives, and encounter "resistance and delay" from those representatives.
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The regulator noted in a press release that Adobe switched primarily to a subscription model for its products after 2012, and most of the company's revenue now comes from subscriptions.
The Adobe Creative Cloud apps on a laptop arranged in the Brooklyn borough of New York, US, on Friday, July 28, 2023. (Gabby Jones/Bloomberg via Getty Images / Getty Images)
"Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles," said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. "Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel."
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Signage outside the Federal Trade Commission (FTC) headquarters in Washington, DC, US, on Friday, Feb. 17, 2023. (Ting Shen/Bloomberg via Getty Images / Getty Images)
Dana Rao, Adobe's general counsel and Chief Trust Officer, said in a statement that the company "will refute the FTC's claims in court."
"Subscription services are convenient, flexible and cost effective to allow users to choose the plan that best fits their needs, timeline and budget," Rao said. "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."