Adobe to pay $75 million to resolve U.S. lawsuit over subscription cancellations
Adobe said on Friday it would pay $75 million to settle a U.S. government lawsuit accusing the Photoshop and Acrobat maker of harming consumers by hiding high cancellation fees and making it difficult to cancel subscriptions.
The San Jose, California-based company also said it would offer $75 million of free services to customers, in addition to the $75 million payment to the U.S. Department of Justice, pending court approval.
In a June 2024 complaint, the Justice Department and Federal Trade Commission accused Adobe of concealing cancellation fees for its popular “annual pay monthly” subscription plan, which can sometimes total hundreds of dollars, in small print or behind text areas and hyperlinks.
They also said Adobe made subscription cancellations difficult, forcing online cancellations to navigate many pages and phone cancellations to repeat to multiple representatives and face “resistance and delays.”
Adobe was accused of violating the “Restore Online Shoppers’ Confidence Act,” a 2010 law prohibiting merchants from imposing fees, including for automatic subscription renewals, without clearly disclosing material terms and obtaining customer consent.
In a statement on its website, Adobe said it has recently streamlined its sign-up and cancellation procedures and made them more transparent.
“While we disagree with the government’s allegations and deny any wrongdoing, we are pleased to resolve this matter,” Adobe said.
The Justice Department and FTC did not immediately respond to requests for comment. Adobe also did not immediately respond to additional comment requests.
Subscriptions accounted for 97% of Adobe’s $6.4 billion in revenue for the quarter ending February 27.
Adobe announced this settlement a day after Chief Executive Shantanu Narayen said he would step down after more than 18 years.
The company’s shares have dropped this year, reflecting investors’ concerns about how artificial intelligence will impact Adobe’s business prospects.
