The United States Department of Justice (DOJ) has filed a lawsuit against Adobe in the United States District Court, Northern District of California, alleging that the software company obscures fees and makes it illegally tricky for users to cancel software subscriptions.
The complete complaint, filed today, June 17, has been filed by the DOJ after notification and referral from the Federal Trade Commission (FTC).
“For years, Adobe has harmed consumers by enrolling them in its default, most lucrative subscription plan without clearly disclosing important plan terms,” the lawsuit alleges. “Adobe fails to adequately disclose to consumers that by signing up for the ‘Annual, Paid Monthly’ subscription plan, they are agreeing to a yearlong commitment and a hefty early termination fee that can amount to hundreds of dollars. Adobe clearly discloses the early termination fee only when subscribers attempt to cancel, turning the stealth early termination fee into a powerful retention too that [redacted] by trapping consumers in subscriptions they no longer want.”
Although entire paragraphs have been redacted from the publicly available lawsuit, what is eminently clear is that the United States aims to end Adobe’s “unlawful conduct” and seeks injunctive relief, civil penalties, monetary relief, and additional relief.
The lawsuit names the United States of America as the plaintiff, with Adobe as the primary defendant. Additional defendants include Maninder Sawhney, Adobe’s Senior Vice President of Digital Go To Mark and Sales at Adobe, and David Wadhwani, Adobe’s President of Digital Media Business. The lawsuit explains that Sawhney and Wadhwani have acted in ways relevant to the complaint, alone or in concert with others.
“The Federal Trade Commission is taking action against software maker Adobe and two of its executives, Maninder Sawhney and David Wadhwani, for deceiving consumers by hiding the early termination fee for its most popular subscription plan and making it difficult for consumers to cancel their subscriptions,” the Federal Trade Commission explains in its associated statement.
“Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles,” says Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “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 FTC claims that, based on complaints it has received from consumers, Adobe failed to explain its pricing model and early termination fees adequately. Further, users have taken issue with Adobe weaponizing its early termination fees to allegedly pressure customers into not canceling their subscriptions. This corresponds to multiple parts of the DOJ’s lawsuit, including that it believes Adobe makes canceling a subscription excessively difficult, to the point of violating consumer protection laws.
“When consumers reach out to Adobe’s customer service to cancel, they encounter resistance and delay from Adobe representatives. Consumers also experience other obstacles, such as dropped calls and chats, and multiple transfers. Some consumers who thought they had successfully cancelled their subscription reported that the company continued to charge them until discovering the charges on their credit card statements,” the FTC says.
The complaint specifically charges Adobe’s business practices with violating the Restore Online Shoppers’ Confidence Act (ROSCA), (https://www.ftc.gov/legal-library/browse/statutes/restore-online-shoppers-confidence-act) which includes prohibitions against unfair and deceptive online sales practices. The act, law 15 U.S.C. §§ 8401-8405, was approved by the United States Congress in December 2010, about two years before Adobe adopted its much-maligned subscription-only model. As much as users have disliked this move, it has led to Adobe achieving record revenues year after year.
The FTC opted to refer the civil penalty complaint to the DOJ by a three-to-zero vote. The United States has requested a trial by jury and demands relief in the form of conviction, monetary civil penalties, permanent injunctions to prevent further ROSCA violations, and additional relief to those affected.
Image credits: Header photo created using an image licensed via Depositphotos.