The United States Department of Justice (DOJ) and the Federal Trade Commission (FTC) have filed a lawsuit against Adobe for allegedly making cancelations for its online subscription service too difficult.
Filed Monday against Adobe and two executives, the lawsuit alleges that Adobe “imposed a hidden early termination fee on millions of online subscribers and that Adobe forced subscribers to navigate ‘a complex and challenging cancellation process designed to deter them from cancelling subscriptions they no longer wanted,'” according to Variety.
A redacted copy of the complaint said Adobe “systematically violated” the Restore Online Shoppers’ Confidence Act (ROSCA) by using fine print and “inconspicuous hyperlinks” to hide vital information about the agreement, which included “info about a significant early termination fees that customers may be charged when they cancel their subscriptions.”
Adobe allegedly “profited from this hidden fee, misleading consumers about the true costs of a subscription and ambushing them with the fee when they try to cancel, wielding the fee as a powerful retention tool.” The company also violated ROSCA by allegedly failing to give subscribers an easy way to cancel recurring payments, subjecting them to a “convoluted and inefficient cancellation process.”
In a statement released on Monday, Adobe said it will fight the lawsuit and defended their business practices.
“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,” said Dana Rao, Adobe’s general counsel and chief trust officer. “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.”
Per Variety, the lawsuit seeks “unspecified money to compensate consumers who were allegedly affected by the activity and civil fines on the defendants, as well as a permanent injunction to prohibit them from engaging in future violations.”
“As the government’s lawsuit notes, Adobe’s subscription revenue has nearly doubled in recent years. In 2019, Adobe earned $7.71 billion in subscription-based revenue,” noted the outlet. “By 2023, subscription-based revenue accounted for $14.22 billion of the company’s $19.41 billion in total annual revenue.”
Principal Deputy Assistant Attorney General Brian Boynton, head of the DOJ’s Civil Division, said the government stands ready to enforce ROSCA.
“The Justice Department is committed to stopping companies and their executives from preying on consumers who sign up for online subscriptions by hiding key terms and making cancellation an obstacle course,” said Boynton. “We will continue to enforce ROSCA against those who engage in such misconduct. No company, whether it is a small business or a member of the Fortune 500 like Adobe, is above the law.”
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