Tuesday, June 18th, 2024 Posted by Jim Thacker

US sues Adobe for ‘ambushing’ subscribers with cancellation fees

The US Department of Justice and the Federal Trade Commission are suing Adobe over its subscriptions policy for software like Photoshop and After Effects.

The civil action, which has been brought against the company and two of its senior executives, alleges that Adobe “hides” important terms of its default subscription plan, then “ambushes” subscribers with a “hefty” early termination fee if they try to cancel.

The FTC complaint concerns Adobe’s ‘Annual, paid monthly’ plans (right): the default prices displayed for many software subscriptions on the Creative Cloud store (left).

Which Adobe subscription plan does the DOJ and FTC action refer to?
The civil complaint filed by the DOJ yesterday concerns Adobe’s ‘Annual, paid montly’ (APM) subscription plan.

APM is the default subscription plan for many of Adobe’s key software applications, including Photoshop and After Effects, and its Creative Cloud All Apps plans.

When browsing Creative Cloud subscriptions on Adobe’s website, the monthly price displayed for Photoshop is for an APM subscription.

Only after clicking through from the homepage can users see that the actual price for a monthly subscription is higher, and that the APM plan involves a year-long commitment, with an early termination fee (ETF) if you cancel after 14 days.

Subscriptions have been the only way to access to new versions of most Adobe software for almost a decade, the firm having been the first major CG tools developer to go subscription-only.

What do the DOJ and FTC allege that Adobe has done wrong?
In its complaint, the FTC alleges that “for years, Adobe has harmed consumers by enrolling them in its default, most lucrative subscription plan without clearly disclosing important plan terms”.

“Adobe fails to adequately disclose to consumers that by signing up for the [APM plan], they are agreeing to a year-long commitment and a hefty early termination fee.”

The FTC states that Adobe “hides” important terms of the APM plan in fine print and behind hyperlinks, “providing disclosures that are designed to go unnoticed”.

Adobe then “ambushes subscribers with the … ETF when they attempt to cancel”, attempting to deter cancellations by making the process “onerous and complicated”.

In a thread on X announcing the action, FTC Chair Lina Khan states that “some users who tried to cancel by contacting customer service would have their calls drop or disconnect and then have to re-explain everything all over again.

“Others would be stuck in an endless loop of transfers across various Adobe representatives.”

“Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.

“The FTC will [work] to protect Americans from these illegal business practices.”

Which Adobe executives are the DOJ and FTC taking action against?
The action, for alleged violations of the Restore Online Shoppers’ Confidence Act (ROSCA), has been brought against Adobe and two of its senior executives: Maninder Sawhney, Senior Vice President of Digital Go To Market & Sales, and David Wadhwani, President of Digital Media Business.

On X, Khan wrote that the FTC “won’t hesitate to hold individual executives accountable for violating the law”.

Will Adobe fight the DOJ and FTC action?
Adobe says that it intends to “refute the FTC’s claims in court”.

A brief public statement from Dana Rao, Adobe’s General Counsel and Chief Trust Officer, claims that “we are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process”.

Read the US Department of Justice’s press release about its complaint against Adobe

Read the complaint itself on the Federal Trade Commission website

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