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Adobe sued by DOJ and FTC for ‘hidden’ fees that make it ‘absurdly’ hard to cancel Photoshop subscriptions

Adobe sued by DOJ and FTC for ‘hidden’ fees that make it ‘absurdly’ hard to cancel Photoshop subscriptions

The Department of Justice and Federal Trade Commission sued Adobe, accusing the popular maker of design software like Photoshop and Illustrator of using “hidden” fees and a byzantine customer service process to make it nearly impossible to cancel annual subscriptions.

“Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles,” FTC Bureau of Consumer Protection director Samuel Levine said in a statement. “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.”

According to a civil enforcement action filed against the company and two top executives, Maninder Sawhney and David Wadhwani, in California federal court, Adobe used a number of practices to lock consumers into pricey subscriptions, violating the Restore Online Shoppers’ Confidence Act.

The company allegedly used fine print, optional text boxes, and a maze of hyperlinks to conceal an essentially secret early termination fee that charged users half the value of their remaining annual contracts to cancel, a penalty that could amount to hundreds of dollars, according to the suit.

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Those who did want to cancel their plans faced other obstacles, according to officials.

“Some users who tried to cancel by contacting customer service would have their calls drop or disconnect and then have to re-explain everything all over again,” FTC chair Lina Khan said in a statement on Monday on X. “Others would be stuck in an endless loop of transfers across various Adobe representatives.”

The federal official said such policies make it “absurdly” hard to get out of an Adobe subscription.

One customer described in the suit claimed, “Adobe literally will not let me cancel my subscription.

“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, Adobe’s general counsel and chief trust officer, wrote in a 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.”

Before 2012, Adobe typically sold its software with perpetual licenses, allowing users to pay once for lifetime use.

Then, the company shifted to a subscription model, charging users a regular monthly or yearly fee to maintain their access.

The decision yielded huge returns.

Between 2019 and 2023, Adobe’s subscription-based revenue almost doubled, growing from $7.71bn to $14.22bn, according to the suit.