US gov’t sues Adobe over “deceptive subscription practices”

SAN JOSE: The United States (US) Department of Justice (DOJ) filed a lawsuit against graphic design software company Adobe, accusing it of deceptive practices in its subscription plans for software products like “Photoshop” and “Acrobat”.

The lawsuit was filed in San Jose in the state of California. It alleged that Adobe misled consumers by not clearly disclosing substantial terms, especially hefty early termination fees linked to its “annual, paid monthly” subscription model.

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According to the DOJ, Adobe enrolled its customer in its standard subscription plan, “annual paid monthly” (APM), without adequately notifying them that cancelling within the first year would result in substantial fees, sometimes amounting to hundreds of dollars. These fees typically came to light only when customers attempted to cancel, complicating their ability to opt out of a service they no longer desired.

The lawsuit alleged that Adobe used tactics such as burying critical terms in fine print, option textboxes, and hyperlinks during the subscription sign-up process. These strategies reportedly made it challenging for many consumers to notice and fully understand the financial implications of their subscription choices.

It suggested that Adobe’s methods may obscure important information that consumers should be aware of before committing to a subscription plan.

Adobe also intentionally made the cancellation process difficult and tiresome for subscribers. According to the lawsuit, this involved complex procedures, delays, and additional offers aimed at dissuading customers from canceling their subscriptions.

The lawsuit also stated that Adobe uses the early termination fee not only as a direct cost for canceling a subscription, but also as a deliberate strategy to discourage subscribers from canceling.

The company aimed to retain customers by intentionally complicating the cancellation process with bureaucratic hurdles, additional offers, and delays. The lawsuit argued that this strategy was meant to prolong customer retention by creating obstacles that made it difficult for subscribers to cancel their subscriptions quickly and easily.

Adobe responded to the allegations by stating it will challenge the case in court. The company defended its subscription services, stating that they were designed to provide ‘convenience, flexibility, and cost-effectiveness”.

The company said it lets users choose plans that suit their needs and budgets. Adobe’s General Counsel and Chief Trust Officer argued that the company was committed to being “clear” about subscription terms and making it easy to cancel subscriptions for a positive customer experience.

The lawsuit against Adobe sparked a heated debate online about consumer protection in the digital market, especially concerning how transparent subscription services are. Similar cases in the past, like the US Federal Trade Commission’s lawsuit against Amazon for subscription cancellations, also stirred similarl debate on the issue.

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In 2012, Adobe changed its business model from selling software with one-time purchases to a subscription-based model. The shift greatly increased Adobe’s revenue, with subscriptions now making up most of its earnings.