US Government Sues Adobe Over Hidden Cancellation Fees

The US government has taken legal action against Adobe and two of its top executives, Maninder Sawhney and David Wadhwani, for allegedly hiding cancellation fees and making it difficult for customers to cancel subscriptions. The Federal Trade Commission (FTC) has accused Adobe of misleading consumers by not clearly disclosing the early termination fee for its most popular subscription plan.

Maninder Sawhney serves as a vice president at Adobe, while David Wadhwani is the president of Adobe's digital media division. The Department of Justice, acting on a referral from the FTC, has filed a complaint in federal court against the company. The lawsuit claims that Adobe directed customers towards its "annual paid monthly" subscription plan without properly informing them that cancelling within the first year could result in significant charges, potentially costing hundreds of dollars.

“Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection said in the FTC press release. “Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel.”

"In numerous instances, subscribers who have requested to cancel through Adobe's customer service believe they have successfully cancelled but continue to be charged...Some of these subscribers do not realise for months that Adobe is continuing to charge them, and only learn about the charges when they review their financial accounts," the lawsuit claims.

Adobe has issued a response to the FTC lawsuit, stating its intention to contest the claims in court. The company's general counsel and chief trust officer released the following statement: “Subscription services are convenient, flexible and cost effective to allow users to choose the plan that best fits their needs, timeline and budget. 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 focal point of the dispute is Adobe's Creative Cloud suite, which includes popular tools for photo and video editing, website building, and graphic design. According to the FTC, numerous customers have voiced their frustrations regarding Adobe's cancellation process on social media and through the Better Business Bureau.

Adobe's business model shifted from a one-time user license to a subscription-based model in 2012. Currently, Adobe offers three subscription options: a monthly plan, an annual paid monthly plan, and an annual prepaid plan. The monthly plan is priced at Rs 6,945.48 per month, the annual plan at Rs 1,915.14 per month, and the annual prepaid plan at Rs 21,070.08 per year on Adobe's website.

As of the story's publication, the Adobe India website displays information regarding refunds, cancellations, and billing alongside pricing details. However, it remains unclear whether this information was recently added or has always been present.

This legal move underscores the government's commitment to protecting consumers from deceptive practices, ensuring that companies like Adobe are transparent about their fees and cancellation policies.