FTC targets Adobe for hidden fees and difficult subscription cancellations

FTC says Adobe fails to adequately disclose relevant cancellation information

Federal Trade Commission (FTC) has filed a complaint^[1] against Adobe and two of its executives, Maninder Sawhney and David Wadhwani, in the U.S. District Court for the Northern District of California.

The complaint accuses Adobe of deceptive practices related to its subscription plans, specifically failing to disclose early termination fees (ETFs) and making the cancellation process unnecessarily complicated.^[2]

FTC alleges that these practices violate the Restore Online Shoppers' Confidence Act (ROSCA), which requires clear disclosure of all terms and a straightforward cancellation mechanism.

Cancellation fees are hidden behind fine print

Adobe transitioned to a subscription model in 2012, requiring users to pay regularly for access to its software, including popular products like Photoshop and Acrobat.

FTC's complaint details how Adobe steers consumers towards its “annual paid monthly” subscription plan without adequately informing them about the ETF, which can be as much as 50 percent of the remaining monthly payments if canceled within the first year.^[3]

This fee is often hidden in fine print or behind small icons on Adobe's website. Consumers reported to FTC and the Better Business Bureau that they were unaware of the ETF or the requirement to keep the subscription for a year. Adobe’s failure to disclose these terms clearly is central to FTC's allegations.

Deceptive practices when users decide to cancel their subscriptions

The complaint also describes Adobe's cancellation process as intentionally complex, designed to deter consumers from canceling their subscriptions.

When attempting to cancel, consumers must navigate through multiple pages on Adobe's website, starting with locating the account management page, clicking on “Manage Plan,” and then selecting “Cancel Your Plan.”

Even after reaching this point, users are often forced to re-enter their password and complete a mandatory feedback page that prominently displays the ETF, effectively discouraging cancellation.

Furthermore, FTC alleges that Adobe's customer service adds to the difficulties by frequently dropping calls, disconnecting chats, and transferring customers between representatives, forcing them to re-explain their cancellation request each time. Consumers also reported continued billing despite believing they had canceled their subscriptions, further exacerbating their frustration.

FTC seeks appropriate actions from Adobe

FTC's complaint seeks several forms of relief to address these issues. These include a permanent injunction to stop ongoing violations, monetary civil penalties for ROSCA violations, restitution for affected consumers, and the cancellation or modification of existing contracts entered into under deceptive terms.

The complaint also targets Adobe executives Sawhney, Senior Vice President of Digital Go To Market & Sales, and Wadhwani, President of Digital Media Business, accusing them of being aware of and continuing the unlawful practices.

Commission voted 3-0 to refer the civil penalty complaint to the Department of Justice (DOJ) for filing. The DOJ then filed the complaint, which will be decided by the court.

Adobe denies the allegations

In response to FTC's action, Adobe has disputed the allegations. Dana Rao, Adobe's General Counsel and Chief Trust Officer, stated:^[4]

We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process. We will refute FTC’s claims in court.

Adobe maintains that its subscription services are convenient, flexible, and cost-effective, allowing users to choose the plan that best fits their needs, timeline, and budget.

The lawsuit against Adobe highlights the broader regulatory scrutiny of subscription practices and consumer protection. The federal government began investigating Adobe's cancellation practices late last year, and this case is part of a larger effort to ensure companies do not use deceptive tactics to trap consumers in long-term subscriptions.

Adobe's recent attempt to acquire the product design platform Figma for $20 billion^[5] faced antitrust scrutiny, reflecting continued regulatory challenges for the company.^[6]

FTC's Bureau of Consumer Protection Director Samuel Levine said that deceptive cancellation fees should stop being practiced, saying:

Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel. FTC will continue working to protect Americans from these illegal business practices.