Adobe Sued Over Allegedly Deceptive Subscription Plans

To the surprise of many, the United States Department of Justice announced a new lawsuit against Adobe in mid-June 2024. More than just the company, the regulators have also set their sights on two of Adobe’s executives, including a vice president. The company could potentially face extensive litigation surrounding the terms of the company’s software subscription plans. Here’s what to know.

What Does the Lawsuit Allege?

Arising via a referral from the Federal Trade Commission, the lawsuit alleges that Adobe and its executives crafted a deliberately misleading process during the sign-up flow for new subscriptions. In doing so, the company hid the nature of early termination fees that would apply if customers ended their subscriptions during their first year.

Further, the suit alleges that Adobe made the cancellation process user-unfriendly to discourage customers from pursuing a cancellation. As an FTC director, Samuel Levine said, “Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles.”

Confusing Terms and Customer Service

The FTC statement explains how much the process obfuscated the facts while directing customers toward the more costly plans. The website selects the annual subscription divided into 12 monthly payments by default. However, Adobe does not unambiguously disclose that there is a fee for terminating the contract before their 12th payment. If they do so, a charge of 50% of the remaining balance applies.

Consumers could only find this information by clicking on a separate terms and conditions page and searching through the fine print. Occasionally, the information was instead buried in pop-up windows.

The FTC further alleges that Adobe created a challenging customer service experience for consumers requesting a cancellation. Long phone calls, dropped calls, and the sudden presentation of the early termination fee all factored into many complaints. “Some consumers,” the FTC wrote, “thought they had successfully canceled their subscription [but] the company continued to charge them until discovering the charges on their credit card statements.”

Adobe has denied wrongdoing and claims to plan to fight this civil issue in court.

Community Concern About Adobe Spills Over Online

Filings in federal court don’t usually make much of a splash in high-traffic online communities, but the spotlight is on Adobe now. The company has already been at the center of controversy surrounding generative AI training in recent weeks and months. The addition of high-profile allegations by the Department of Justice and the FTC has brought the issue to the attention of a much broader audience.

Online communities from X (formerly Twitter) to Reddit and YouTube have been swamped with users sharing their experiences and frustrations. One popular YouTube channel with almost one million subscribers published a short video on the lawsuit. The host demonstrates precisely how Adobe obscured the location of early termination fee terms and discusses his own experiences with the subscription model. More than 100,000 people saw the video In just two days.

The Growing Software Subscription Market

Across the software industry, subscription models have become popular and even dominant in the marketplace. Today, many types of software receive ongoing updates and development attention, which subscription pricing helps support. The model has nothing inherently wrong, but as we’ve seen, its implementation can be problematic.

Software buyers should be able to make a clear, informed decision about where they spend their money. The total cost of the subscription and the nature of any potential fees should be fully disclosed upfront. There shouldn’t be any opportunity for confusion. Likewise, cancellation should be a user-friendly experience, not a maze of anti-consumer practices. Actions such as those taken by the FTC aim to reinforce the ongoing need for transparency in pricing and service.

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