FTC Alleges Adobe Deters Subscription Cancellations, Hides Early Termination Fee

The Federal Trade Commission (FTC) is taking action against Adobe and two of its executives, alleging that they deceived consumers by hiding an early termination fee on a subscription plan and making it difficult for customers to cancel their subscriptions.

The agency’s federal court complaint names Adobe; the president of the company’s digital media business, David Wadhwani; and one of its vice presidents, Maninder Sawhney, the FTC said in a Monday (June 17) press release.

“Adobe trapped customers into yearlong subscriptions through hidden early termination fees and numerous cancellation hurdles,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in the release.

Adobe released a statement Monday saying that it will refute the FTC’s claims in court.

“Subscription services are convenient, flexible and cost effective to allow users to choose the plan that best fits their needs, timeline and budget,” Dana Rao, general counsel and chief trust officer at Adobe, said in the statement. “Our priority is to always ensure our customers have a positive experience. We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process. We will refute the FTC’s claims in court.”

The FTC said in its release that consumers have complained that they were not aware of Adobe’s early termination fee (ETF), which amounts to 50% of the remaining monthly payments when a consumer cancels in their first year.

Consumers have also said that they were not aware that the company’s “annual paid monthly” plan required their subscription to continue for a year, according to the release.

While Adobe prominently displays the plan’s “monthly” cost during enrollment on the website, it “buries” the ETF disclosures in small print or requires consumers to hover over small icons to find them, the FTC said in the release.

The agency’s complaint also alleges that Adobe’s cancellation processes are designed to make cancellation difficult, that consumers must navigate several pages in order to cancel, and that they encounter resistance and delay from Adobe representatives if they reach out to customer service, per the release.

The complaint charges that Adobe’s practices violate the Restore Online Shoppers’ Confidence Act, according to the release.

In another recent action that cited that act, the FTC filed a complaint against bill payment company doxo in April, alleging that the company misleads consumers and tacks on junk fees.

In a statement released at the time, doxo said the FTC investigation “is inaccurate, and unjust, pushing forth a narrative that is a monumental step backward from the objective of reducing bill pay complexity and costs.”