Adobe sued by US government for allegedly treating online subscription cancellation as an ‘obstacle course’

According to the US government, the steps Adobe allegedly took to make it harder to cancel online subscriptions weren’t just annoying – they were also illegal.

The U.S. Department of Justice and the FTC filed a lawsuit Monday against Adobe and two of its executives, alleging that they imposed a hidden early termination fee on millions of online subscribers and that Adobe forced subscribers to navigate a “complicated and difficult cancellation process designed to discourage them to cancel subscriptions they no longer wanted.” A redacted copy of the complaint can be found at this link.

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Adobe said it will fight the lawsuit. “Subscription services are convenient, flexible, and cost-effective, allowing users to choose the plan that best fits their needs, schedule, and budget. Our top priority is always to provide our customers with a positive experience,” Dana Rao, Adobe’s general counsel and chief trust officer, said in a statement Monday. “We are transparent about the terms of our subscription agreements and have a simple cancellation process. We will defend the FTC’s claims in court.”

The lawsuit concerns Adobe’s online subscriptions for design and productivity software through its adobe.com website. The lawsuit, filed Monday in the U.S. District Court for the Northern District of California, also names as defendants David Wadhwani, Adobe’s president of digital media, and Maninder Sawhney, Adobe’s vice president of digital marketing and sales. The U.S. government’s lawsuit accuses Adobe and two executives of violating the Restore Online Shoppers’ Confidence Act (ROSCA).

According to the complaint, Adobe “systematically violated ROSCA” by using small print and “inconspicuous hyperlinks” to hide important information about its subscription plans — including significant early termination fees that customers could be charged if they canceled their subscriptions. The complaint alleges that Adobe “profited from this hidden fee for several years by misleading consumers about the true cost of their subscriptions and ambushing them when they attempted to cancel, using the fee as a powerful retention tool,” according to the government’s complaint.

The complaint alleges that Adobe further violated ROSCA by failing to provide consumers with a simple mechanism to cancel recurring, online subscriptions. Instead, the lawsuit claims, Adobe protected its subscription revenue by preventing subscribers from canceling, subjecting them to a “complicated and inefficient cancellation process” filled with unnecessary steps, delays, unsolicited offers and warnings.

The lawsuit seeks unspecified monetary damages to compensate consumers allegedly affected by this activity and civil penalties against the defendants, as well as a permanent injunction prohibiting them from engaging in future violations.

As the government notes in the lawsuit, Adobe’s subscription revenue has nearly doubled in recent years. In 2019, Adobe earned $7.71 billion in subscription revenue. By 2023, subscription revenue will account for $14.22 billion of the company’s $19.41 billion in total annual revenue.

“The Department of Justice is committed to stopping companies and their executives from preying on consumers who subscribe online by hiding key terms and making it more difficult to cancel subscriptions,” said Principal Deputy Attorney General Brian Boynton, head of the Justice Department’s Civil Division. “We will continue to enforce ROSCA against those engaging in such misconduct. No company, whether a small business or a Fortune 500 member like Adobe, is above the law.”

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