Adobe in US legal crosshairs over alleged hidden cancellation fees

Adobe, the developer of the popular Photoshop and Creative Cloud software, is being sued by the US consumer watchdog, the Federal Trade Commission (FTC), which accuses the Californian company of misleading consumers with its fees subscription.

The FTC, which is pursue not only Adobe, but also two company executives, Vice President Maninder Sawhney and President David Wadhwani, said the software maker was hiding early termination fees for its most popular subscription plan. Additionally, Adobe also makes it difficult for consumers to cancel their subscriptions.

What Adobe is doing, the FTC claims, is steering people toward the annual paid monthly subscription plan. This is pre-selected by default and displays the monthly cost of the plan as part of the subscription sign-up process.

Key terms such as Adobe charging a 50% early termination fee if a customer cancels the subscription within the first year are, however, not clearly disclosed.

The remaining payment could be hundreds of dollars, the FTC said. A Creative Cloud subscription costs US$659.88 per year, or NZ$1,075.55.

The FTC also said that information about early termination fees is buried in fine print that requires people to hover over small icons to find it.

The consumer watchdog also said in its complaint that Adobe was aware of consumer confusion over the terms of its subscription transactions.

Adobe and the two executives in charge of the company’s digital media business allegedly violated the US Restore Online Shoppers’ Confidence Act (ROSCA) and the FTC Act by failing to clearly disclose the terms of the subscription model.

In addition to taking legal action against Adobe, the FTC also advises users who want to try software to check what others are saying online and study the terms and conditions of “free trial software.”

Users can also dispute unexpected charges with their credit card issuers, the FTC suggested.

Adobe released a brief statement on the FTC lawsuit, denying all allegations.

Subscription services are convenient, flexible and cost-effective to allow users to choose the plan that best suits their needs, schedule and budget. Our priority is to always guarantee our customers a positive experience. We are transparent about the terms and conditions of our subscription contracts and have a simple cancellation process. We will refute the FTC’s claims in court.” – Dana Rao, General Counsel and Director of the Trust

News of the lawsuit comes shortly after furore over Adobe’s update to its terms and conditions, leading users to believe the company is granting itself rights to use subscriber-created content to train the AI.

Adobe has since come provided a clarification on this, saying that it would not train generative AI on customer content and that users remained owners of their own content.