• The U.S. government is filing a lawsuit against Adobe, alleging that it did not fully disclose the cost of its subscription and that it was designed to make it difficult for consumers to cancel their subscription.
  • When customers do attempt to cancel, the DOJ alleges that Adobe requires them to go through an “onerous and complicated” cancellation process.

OUR TAKE
The lawsuit reflects a trend toward scrutiny of the digital services industry’s internal sales and subscription models, particularly in the areas of consumer rights and transparency. Adobe’s review of the subscription model of a well-known software company is likely to spark broader industry-wide discussion and regulatory attention.
–Revel Cheng, BTW reporter

The Justice Department alleges that Adobe hid early cancellation fees and trapped consumers in pricey subscriptions.

What happened?

The US government is suing Adobe for allegedly hiding expensive fees and making it difficult to cancel a subscription. In the complaint filed on Monday, the Department of Justice claims Adobe “has harmed consumers by enrolling them in its default, most lucrative subscription plan without clearly disclosing important plan terms.”

The lawsuit alleges Adobe “hides” the terms of its annual, paid monthly plan in the “fine print and behind optional textboxes and hyperlinks.” In doing so, the company fails to properly disclose the early termination fee incurred upon cancellation “that can amount to hundreds of dollars,” the complaint says.

Customers encounter similar obstacles when attempting to cancel their subscriptions over the phone or via live chats, the DOJ alleges. The complaint claims “subscribers have had their calls or chats either dropped or disconnected and have had to re-explain their reason for calling when they re-connect.” The lawsuit alleges that these practices break federal laws designed to protect consumers.

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Why it’s important

“Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel.” The federal government began looking into Adobe’s cancellation practices late last year.

The lawsuit speaks to continued regulatory scrutiny of Adobe. In 2022, Adobe attempted to acquire the product design platform Figma for $20 billion, but it abandoned the deal last year after facing antitrust scrutiny from European regulators.

Consumers expect transparency and choice in their subscriptions to digital services, and they want to have a clear understanding of the cost, terms, and cancellation process of their subscriptions. The lawsuit highlights the responsibility that companies face in the promotion and management of subscription services to ensure that consumers are able to make informed decisions without being misled or distressed.