USA sues Photoshop manufacturer Adobe
The US Federal Trade Commission (FTC) takes action against Adobe and company executives for hidden fees and making it difficult to cancel subscriptions.
(Image: r.classen/Shutterstock.com)
The US government sued Photoshop and Acrobat maker Adobe on Monday. It accuses the US software company based in San José, California, and two of its executives of harming consumers by hiding high termination fees for its most popular subscription plan and making it difficult to cancel subscriptions.
In a complaint (Case No. 5:24-cv-03630) filed by the US Department of Justice in the US Federal Court for the Northern District of California in San Jose on the advice of the US Federal Trade Commission (FTC), Adobe and two of its executives, David Wadhwani, President of Digital Media, and Maninder Sawhney, Senior Vice President of Digital Sales, are accused of "luring consumers into one-year subscriptions" through "hidden early termination fees and numerous cancellation hurdles". However, consumers were not adequately informed that canceling the subscription in the first year could cost hundreds of US dollars, according to a statement from the regulator.
Adobe has mainly switched to a subscription model since 2012, with consumers having to pay for software access on a recurring basis. Such subscriptions constitute the majority of the company's revenue.
Hidden fees and difficult termination
According to the complaint, Adobe charges the early termination fee as 50 percent of the remaining payments if the customer cancels in the first year. In turn, the fees and other important terms for the "annual paid monthly subscription" are hidden on the company's website in small print or behind text boxes and hyperlinks. Many consumers are therefore unaware that the "annual paid monthly" plan requires them to continue their subscription for a year. Although Adobe is aware of consumers' problems with the subscription plan, the company continues its practice, the FTC criticizes.
Adobe's cancellation process is also designed to make it difficult for consumers to cancel. According to the US trade regulator, Adobe forces subscribers who want to cancel online to unnecessarily click through numerous pages, while subscribers who cancel by phone are met with "resistance and delays from Adobe employees".
"Americans are tired of companies passing the ball to them when they sign a contract and then putting obstacles in their way when they try to cancel. The FTC will continue to work to protect Americans from these illegal business practices," said Samuel Levine, Director of the FTC's Bureau of Consumer Protection, in the regulator's announcement.
(akn)
