US regulators sues Adobe over hard-to-cancel subscriptions

The Adobe logo is being displayed on a smartphone screen and on a computer screen in Athens, Greece, on May 22, 2024. Photo / Getty Images

US regulators sued Adobe on Monday (Tuesday NZT) over claims that the company made it difficult to cancel subscriptions to Photoshop and other software, an escalation by regulators in a crackdown against such practices.

The Justice Department said in its lawsuit that Adobe hid details of an expensive cancellation fee from consumers “in fine print and behind optional text boxes and hyperlinks.” Adobe’s website and customer service representatives made cancelling additionally challenging, according to allegations in the suit.

“Adobe knows about the barriers consumers face when attempting to cancel their subscriptions,” the Government said in the lawsuit, which was filed in the District Court for the Northern District of California.

The challenge follows a similar suit by the Federal Trade Commission against Amazon last year, in which the Government argued that the e-commerce giant made it hard for customers to terminate their Prime memberships. The agency has proposed new “click to cancel” rules, which would require companies to offer an easy way to stop paying for a product.

In the suit against Adobe, the Justice Department named David Wadhwani, the president of its digital media business, and Maninder Sawhney, a company vice president, as defendants. The suit follows an investigation into Adobe’s practices by the FTC.

“We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process,” said Dana Rao, Adobe’s general counsel, in a statement. “We will refute the FTC’s claims in court.”

Monday’s lawsuit targets Adobe’s suite of popular design software, including Photoshop, Illustrator and Acrobat.

The company earned US$14.22 billion in revenue from subscriptions in 2023, up from $7.71b in 2019, the Government said.

Adobe took steps to lock consumers into yearly subscriptions billed in monthly increments, the lawsuit argued. The overall price of the plan was often displayed in bold when customers signed up. But a reference to Adobe’s cancellation fee was displayed in lighter italic text, the Government said.

Consumers had to click a separate link to see details of the early cancellation fee, which cost half of any remaining payments and applied if a customer canceled in the first year, the Government said.

Written by: David McCabe

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