Adobe will pay $75 million to settle a US government lawsuit alleging it hid expensive termination fees and made subscription cancellations difficult. The Justice Department and FTC accused the company of burying key terms and creating obstructive cancellation processes, violating consumer protection laws.
Adobe denies any wrongdoing but agreed to the settlement, which also includes providing $75 million in free services to customers pending court approval. The announcement follows recent leadership changes and comes as the company faces investor concerns about the impact of artificial intelligence on its business.
The main topics covered are the government lawsuit and settlement, the specific allegations of hidden fees and difficult cancellations, Adobe's response, and the business context of the announcement.
Adobe said on Friday it will pay $75 million to resolve a US government lawsuit accusing the Photoshop and Acrobat maker of harming consumers by concealing âhefty termination â fees and â making it difficult to cancel subscriptions.
The San Jose, California-based company said it will also provide $75 million of free services to customers, in addition to making the $75 million payment to the US Department of Justice. Court approval is required.
In a June 2024 complaint, the Justice Department and Federal Trade Commission accused Adobe of burying termination fees for its popular "annual paid monthly" subscription plan, sometimes reaching hundreds of dollars, â in the âfine print or behind text boxes and hyperlinks.
They also said Adobe made cancelling subscriptions a hassle, forcing subscribers who wanted to cancel online â to wade through numerous pages, and subscribers who wanted to cancel by phone to repeat themselves to multiple representatives and encounter "resistance and delay."
Adobe was accused of violating the Restore Online Shoppers' Confidence Act, a 2010 law barring merchants from imposing charges, including for automatic subscription renewals, without disclosing material terms clearly and obtaining customer consent.
In a statement on its website, Adobe said it has in recent years streamlined its sign-up and cancellation âprocesses and made them more transparent.
"While we disagree with the government's claims and deny any wrongdoing, we are pleased to resolve this matter," Adobe said.
The Justice Department â and the FTC did not immediately respond to requests for comment. Adobe did not immediately respond to requests for additional comment.
Subscriptions accounted for 97% of Adobe's $6.4 billion in revenue for the quarter ending February 27.
Adobe announced the settlement one day after chief executive Shantanu Narayen said he will step down after more than 18 years in the role.
The company's shares have fallen this year, reflecting investor concern about how artificial intelligence will affect Adobe's business prospects.
The San Jose, California-based company said it will also provide $75 million of free services to customers, in addition to making the $75 million payment to the US Department of Justice. Court approval is required.
In a June 2024 complaint, the Justice Department and Federal Trade Commission accused Adobe of burying termination fees for its popular "annual paid monthly" subscription plan, sometimes reaching hundreds of dollars, â in the âfine print or behind text boxes and hyperlinks.
They also said Adobe made cancelling subscriptions a hassle, forcing subscribers who wanted to cancel online â to wade through numerous pages, and subscribers who wanted to cancel by phone to repeat themselves to multiple representatives and encounter "resistance and delay."
Adobe was accused of violating the Restore Online Shoppers' Confidence Act, a 2010 law barring merchants from imposing charges, including for automatic subscription renewals, without disclosing material terms clearly and obtaining customer consent.
In a statement on its website, Adobe said it has in recent years streamlined its sign-up and cancellation âprocesses and made them more transparent.
"While we disagree with the government's claims and deny any wrongdoing, we are pleased to resolve this matter," Adobe said.
The Justice Department â and the FTC did not immediately respond to requests for comment. Adobe did not immediately respond to requests for additional comment.
Subscriptions accounted for 97% of Adobe's $6.4 billion in revenue for the quarter ending February 27.
Adobe announced the settlement one day after chief executive Shantanu Narayen said he will step down after more than 18 years in the role.
The company's shares have fallen this year, reflecting investor concern about how artificial intelligence will affect Adobe's business prospects.
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