US government sues Adobe over hidden subscription cancellation fees and difficult cancellation process

In context: The U.S. government has sued Adobe over allegations that it deceived consumers by hiding early termination fees and deliberately making product subscriptions difficult to cancel. In the Justice Department’s complaint filed on referral by the FTC, Adobe is accused of harming consumers by enrolling them in its most lucrative default subscription plan without clearly disclosing the plan’s material terms.

It is alleged that Adobe fails to adequately disclose that canceling one of its subscriptions within the first year can result in early termination fees that could amount to hundreds of dollars. “In fact, if consumers cancel during this (annual) period, Adobe charges them 50% of the remaining payments for this one-year period, which could total hundreds of dollars,” the FTC wrote.

It is also claimed that this fee information was found in the fine print or required consumers to hover over tiny icons to see it. Fees are only explicitly disclosed when users attempt to cancel.

The FTC takes action against Adobe and its executives for hiding fees, preventing consumers from easily canceling their software subscriptions: https://t.co/tJ7J3tLxc4 /1

– FTC (@FTC) June 17, 2024

Even canceling a subscription with Adobe is highlighted as being unnecessarily arduous. There are reports of customers experiencing resistance and delays from Adobe representatives, dropping calls and chats, having to navigate multiple web pages and pop-ups, and handling multiple transfers. All of this can cause people to give up on trying to cancel.

Adobe said in a December SEC filing that it has been cooperating with the FTC since June 2022 after receiving a subpoena from the agency regarding its “subscription disclosure and cancellation practices relating to the law on online buyer confidence.

The law covers several rules that services must follow. These include never prolonging the cancellation process, canceling accounts once requests have been submitted, promptly honoring a request consistent with any policy to issue refunds or authorize cancellations, and not not force customers to cancel over the phone if they have only registered. online. Other sections of the Act require operators to streamline the cancellation process and accept the request immediately (i.e., without multiple “Are you sure?” prompts).

Adobe wrote at the time: “We believe our practices comply with the law and are currently in discussions with FTC staff,” the company wrote. But it added a warning that defending itself or paying the fine would have a “material impact on our financial results and operations.”

Maninder Sawhney, Adobe’s senior vice president of digital marketing and sales, and David Wadhwani, president of the company’s digital media business, are also named in the lawsuit for overseeing the early termination policy.

Adobe defended the accusations against it. “Subscription services are convenient, flexible and cost-effective to allow users to choose the plan that best fits their needs, schedule and budget,” wrote Dana Rao, director of the trust. “Our priority is to always ensure our customers have a positive experience. We are transparent about the terms and conditions of our subscription agreements and have a simple cancellation process. We will refute the FTC’s claims in court. “

June is not turning out to be a good month for Adobe. The company was recently caught up in controversy over changes to its terms of service that appeared to allow analysis of user-generated content. The company later clarified that it would not steal people’s work.

Title: midiman