FTC sues Adobe over termination fees and cancellation hurdles

The Federal Trade Commission (FTC) has sued Adobe and two of its executives, claiming the Creative Cloud maker deceives consumers by hiding high termination fees and strategically erecting barriers that make it difficult to cancel a subscription.

The FTC says the actions of software maker David Wadhwani, president of the company’s digital media business, and Adobe vice president Maninder Sawhney constitute violations of the Restore Online Shoppers’ Confidence Act – a 2010 federal law that prohibits the imposition of certain charges. , including for automatic subscription renewals, unless the material terms are openly exposed and informed consent from customers is obtained.

The FTC is asking a federal court to impose civil penalties and a permanent injunction on Adobe that will prevent the company from continuing to commit its alleged violations.

“Adobe trapped its customers into one-year subscriptions through hidden early termination fees and numerous barriers to cancellation,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Americans are tired of companies hiding the ball when signing up for a subscription, then putting up roadblocks when trying to cancel. The FTC will continue to work to protect Americans from these illegal business practices.

An Adobe spokesperson said the technology solutions provider rejects the FTC’s allegations and plans to fight them in court.

“Subscription services are convenient, flexible and cost-effective to allow users to choose the plan that best fits their needs, schedule and budget,” said Dana Rao, general counsel and director of trust d ‘Adobe. “We are transparent with the conditions. and the terms of our subscription contracts and have a simple cancellation process.

Many designers, decorators/printers, and others in the print/promotional products industry rely on Adobe offerings like Creative Cloud. This platform offers more than 20 creative applications, including Photoshop and Acrobat Pro.

“Adobe has trapped its customers into year-long subscriptions through hidden early cancellation fees and numerous barriers to cancellation. » Samuel Levine, FTC

According to the FTC, Adobe and its executives targeted by the complaint pushed users toward a “monthly annual paid” subscription, but without specifying that canceling the plan within the first year could cost hundreds of dollars. The Early Termination Fee (ETF) is 50% of the remaining monthly payments when a consumer cancels within the first year.

“Information about Adobe’s ETF is buried on the company’s website in small print or requires consumers to hover over small icons to find the information,” the FTC said, noting that consumers have filed complaints complaints about it, and adding: “Adobe uses the ETF to ambush consumers to dissuade them from canceling their subscription.

The FTC further alleged that Adobe attempts to deter cancellation by intentionally making plan termination difficult – which is done, in part, by requiring consumers to navigate numerous website pages in order to delete a subscription .

“When consumers contact Adobe customer service to cancel,” the FTC said, “they are met with resistance and delays from Adobe representatives.” Consumers also face other obstacles, such as dropped calls and chats and multiple transfers. Some consumers who thought they had successfully canceled their subscriptions said the company continued to charge them until they discovered the charges on their credit card statements.

For the quarter ended March 1, subscriptions accounted for 95% of Adobe’s $5.18 billion in revenue, or a total of $4.92 billion.