On Monday, June 17, the US government filed a lawsuit against Adobe Inc., the software giant known for its popular products like Photoshop and Acrobat, alleging that the company engaged in deceptive practices related to its subscription pricing terms.
The complaint, lodged in the federal court in San Jose, California, accuses Adobe of enrolling consumers into its most lucrative subscription plans without clearly disclosing critical terms, including hefty early termination fees.
SAN FRANCISCO, CALIFORNIA - DECEMBER 13: A sign is displayed on the exterior of an Adobe office on December 13, 2023 in San Francisco, California. Computer software company Adobe will report fourth quarter earnings today after the closing bell. Photo by Justin Sullivan/Getty Images
Adobe Hides Hefty Fees Behind the Fine Print: US Lawsuit
The Department of Justice (DOJ) accuses Adobe of harming consumers by automatically enrolling them in "annual, paid monthly" subscription plans without clearly disclosing the terms and conditions upfront. These plans often include substantial early termination fees, sometimes reaching hundreds of dollars.
According to the complaint, these crucial details are obscured in fine print, hidden behind optional textboxes and hyperlinks, and only fully revealed when customers attempt to cancel.
The DOJ alleges that customers face an "onerous and complicated" cancellation process, with Adobe "ambushing" them with unexpected early termination fees. This tactic may deter many from completing the cancellation to avoid these charges.
Samuel Levine, Director of the FTC's Bureau of Consumer Protection, stated, "Adobe lured customers into year-long subscriptions through hidden early termination fees and difficult cancellation procedures."
"Americans are fed up with companies concealing important information during signup and then creating obstacles when they try to cancel," Levine added.
The complaint also accuses Adobe of intentionally making it difficult for consumers to cancel their subscriptions online, forcing them to click through many pages on the company website and deal with "dropped calls and chats, and multiple transfers" from Adobe customer service.
The lawsuit seeks civil fines, an injunction to prevent Adobe from continuing these practices, and other remedies.
The complaint also targets Adobe executives, including Maninder Sawhney, the Senior Vice President of Digital Go-to-Market and Sales, and David Wadhwani, the President of the company's Digital Media Business, for their roles in the allegedly deceptive practices.
As of now, Adobe has not yet released a statement responding to the lawsuit.
Troubling Times for Adobe
This lawsuit comes at a time when Adobe is already under scrutiny for its user terms. Last week, the company faced backlash over updates to its Terms of Use. Users were concerned that the changes implied Adobe might use their unpublished work to train its generative AI models or even claim ownership of their content.
Adobe clarified in a blog post that it does not train its AI on customer content nor claim ownership of users' unpublished works. The company emphasized that its generative AI models, like the Firefly AI, are trained on Adobe's stock library contributions and public domain data, not user-created content.
In statements from its top execs, Adobe acknowledged the need for clearer communication to avoid misunderstandings that could damage the company's reputation.
