The United States Department of Justice filed a civil lawsuit against software giant Adobe Inc., along with two of its executives, Maninder Sawhney and David Wadhwani.
The lawsuit alleges that Adobe has been systematically misleading consumers about the true costs and cancellation terms of its software subscription plans, specifically the Annual Paid Monthly (APM) option.
According to the complaint filed in the U.S. District Court for the Northern District of California, Adobe has been using deceptive tactics to push consumers towards the APM plan without adequately disclosing important information.
“During enrollment, Adobe hides material terms of its APM plan in fine print and behind option textboxes and hyperlinks, proving disclosures that are designed to go unnoticed and that most consumers never see,” according to the complaint. “Adobe then deters cancellations by employing an onerous and complicated cancellation process.”
The government accuses Adobe of hiding the one-year commitment and sturdy early termination fees (ETF) within fine print or inconspicuous hyperlinks during the enrollment process.
This lack of transparency has resulted in many consumers unknowingly signing up for year-long subscriptions they may not have intended, and then being hit with unexpected fees if they try to cancel early.
The lawsuit further alleges that Adobe has made cancelling a subscription a deliberately complex and frustrating process.
The cancellation process is said to involve multiple pages with unnecessary steps, potentially discouraging consumers from following through and leaving them locked into unwanted subscriptions.
The Department of Justice maintains that these practices violate the Federal Trade Commission Act (FTC Act) and the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibit unfair or deceptive business practices and require clear disclosure of material terms in online transactions.
“Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles,” FTC Bureau of Consumer Protection director Samuel Levine said in a statement. “Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel. The FTC will continue working to protect Americans from these illegal business practices.”
The lawsuit seeks a permanent injunction to stop Adobe’s deceptive practices, along with monetary damages and civil penalties for past violations. Additionally, the US is requesting relief for consumers who were harmed, such as refunds or cancellation of ETF charges.
Adobe has denied the allegations and has stated that they will fight the lawsuit. The company claims its subscription terms are clear and that it offers a variety of plan options to meet customer needs.
“Our priority is to always ensure our customers have a positive experience,” Dana Rao, the company’s general counsel, said in a statement. “We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process.”
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