US Files Lawsuit Against Adobe for Withholding Fees and Making It Difficult for Users to Cancel: Learn More

(Reuters) -The American government filed a lawsuit against Adobe on Monday, claiming that the company that makes Acrobat and Photoshop hurts customers by hiding expensive cancellation costs from its most popular subscription plan and making it difficult to stop a membership.

Adobe conceals the costs, which may often amount to hundreds of dollars, and other significant elements in its “annual paid monthly” membership plan in the small print or behind textboxes and hyperlinks, according to a Federal Trade Commission lawsuit filed in a federal court in San Jose, California.

The lawsuit claims that when customers quit during the first year, Adobe charges early termination penalties equal to 50% of the outstanding payments.

Additionally, the FTC said that Adobe makes its subscribers who want to cancel online go through needless pages, and that customers who cancel over the phone often get disconnected, have to repeat themselves to many agents, and experience “resistance and delay” from those agents.

Maninder Sawhney, a senior vice president in digital sales at Adobe, and David Wadhwani, the head of digital media business, are also defendants.

“Through numerous cancellation hurdles and hidden early termination fees, Adobe trapped customers into year-long subscriptions,” said a statement from Samuel Levine, the director of the FTC’s consumer protection department. “Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel.”

Requests for comment from San Jose, California-based Adobe were not immediately answered. Declared in December, it has been assisting the FTC in its investigation of its subscription models.

In the quarter that ended on March 1, Adobe’s revenue came from $5.18 billion, of which $4.92 billion, or 95%, came from subscriptions.

The Restore Online Shoppers’ Confidence Act, a 2010 federal statute that prohibits merchants from charging fees, including for automatic subscription renewals, unless they clearly disclose material conditions and acquire customers’ informed agreement, was allegedly violated by Adobe, according to the Federal Trade Commission (FTC).

The complaint filed on Monday calls for several remedies, including monetary fines and an injunction to stop future violations.