The Federal Trade Commission (FTC) is taking action against Adobe and two of its executives, Maninder Sawhney and David Wadhwani, for allegedly deceiving consumers by hiding early termination fees for its most popular subscription plan and making it difficult for consumers to cancel their subscriptions.
A federal court complaint filed by the Department of Justice (DOJ), upon notification and referral from the FTC, charges that Adobe pushed consumers toward the “annual paid monthly” subscription without adequately disclosing that canceling the plan in the first year could cost hundreds of dollars. Wadhwani is the president of Adobe’s digital media business, and Sawhney is an Adobe vice president.
“Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel. The FTC will continue working to protect Americans from these illegal business practices.”
After 2012, Adobe shifted principally to a subscription model, requiring consumers to pay for access to the company’s popular software on a recurring basis. Subscriptions account for most of the company’s revenue.
According to the complaint, when consumers purchase a subscription through Adobe's website, they are pushed towards its “annual paid monthly” subscription plan, which is pre-selected as a default. While Adobe prominently shows the plan’s “monthly” cost during enrollment, it buries the early termination fee (ETF) details. The ETF amounts to 50 percent of the remaining monthly payments if a consumer cancels within their first year. These disclosures are often hidden in small print or require hovering over small icons on Adobe's website.
Consumers have lodged complaints with both the FTC and Better Business Bureau about these ETFs. Many report being unaware of their existence or that they were committed to a full-year contract under the "annual paid monthly" plan. Despite knowing about this confusion among consumers, Adobe continues steering them towards this plan while obscuring ETF details.
The complaint further alleges that beyond failing to disclose ETFs at sign-up, Adobe uses these fees as deterrents against cancellations. Consumers attempting to cancel their subscriptions online face numerous pages before completion. Customer service interactions reportedly involve resistance and delays from representatives, dropped calls and chats, multiple transfers, and continued charges despite attempts at cancellation.
These practices allegedly violate the Restore Online Shoppers’ Confidence Act.
The Commission voted 3-0 to refer this civil penalty complaint to DOJ for filing in U.S. District Court for Northern California.
Staff attorneys Sana Chaudhry and Daniel Wilkes from FTC's Bureau of Consumer Protection are handling this matter.
The Federal Trade Commission works to promote competition while protecting and educating consumers. For more information on consumer topics or reporting frauds and scams visit consumer.ftc.gov or ReportFraud.ftc.gov.
