Business Blog
FTC says Adobe hid key terms of “annual paid monthly” subscription plan and set up roadblocks to deter customer cancellations
Given the injury and irritation inflicted on consumers by buried terms, hidden charges, and complicated cancellation procedures, it’s no wonder they’re called “negative” options. A federal court complaint the Department of Justice filed upon notification and referral from the FTC alleges that Adobe and corporate executives Maninder Sawhney and David Wadhwani have hidden fees associated with the company’s most popular subscription plan and made it hard for consumers to cancel. It’s the latest action challenging allegedly illegal conduct in the subscription space.
The complaint charges that Adobe steers consumers toward its “annual paid monthly” subscription plan, pre-selecting it as a default and displaying the “monthly” cost in the enrollment process. But according to the complaint, Adobe doesn’t clearly disclose key conditions – for example, that cancelling the plan in the first year will result in an “Early Termination Fee.” In fact, if consumers cancel during that period, Adobe charges them 50% of the remaining payments for that one-year term, which could total hundreds of dollars. What’s more, the complaint alleges that on Adobe’s website, the company has buried that information in fine print or requires people to hover over small icons to find the disclosures.
Did the resulting consumer confusion about the terms of the transaction come as a surprise to Adobe? No. According to the complaint, Adobe has known about it.
How Adobe buries the details of the deal is only part of the story of how consumers are allegedly injured by the company’s practices. The lawsuit also charges that Adobe designed its procedures to make it difficult for consumers to cancel and even uses the Early Termination Fee as a way to deter them from stopping their subscriptions.
When consumers have tried to cancel on the company’s website, they’re taken through an obstacle course of screens and clicks. When consumers try to cancel by contacting an Adobe customer service representative, they face other roadblocks and resistance – for example, dropped calls, interrupted chats, and multiple transfers. According to the complaint, some people who thought they had successfully cancelled their subscription report that it wasn’t until they checked their credit card statement that they learned Adobe had continued to charge them.
Count I of the complaint alleges that Adobe, President of the company’s digital media business Wadhwani, and Adobe Vice President Sawhney violated the Restore Online Shoppers’ Confidence Act (ROSCA) and the FTC Act by failing to clearly and conspicuously disclose material terms of the transaction – for example, the subscription’s billing and renewal terms, the length of the subscription, how and when cancellation fees will apply, and the amount of those fees – before getting the consumer’s billing information. According to Count II, Adobe, Wadhwani, and Sawhney violated ROSCA and the FTC Act by failing to get the consumer’s express informed consent before charging their credit card, debit card, or other account. Count III of the complaint – which names Adobe – alleges that the company failed to provide “simple mechanisms” for a consumer to stop recurring charges on credit card, debit card, or other account, in violation of ROSCA and the FTC Act.
The action is pending in a California federal court. If your company uses a subscription model, the filing of the lawsuit should signal to you that the FTC is continuing the fight against buried terms and conditions, hidden fees, and convoluted cancellation procedures.
Where do I gladly sign any complaint on Adobe’s s subscription practices?
In reply to Where do I gladly sign any… by RF Ripp
Following this feed as I'm in the same position
In reply to Where do I gladly sign any… by RF Ripp
I second that, they have an inferior product; they keep raising the cost and not fixing their bugs, moving things around needlessly (just to raise the price), and their tech support is more worried about my subscription than having knowledge of their product.
Adobe also kept charging me after canceling. I had to have my bank block the payments and Adobe would use a different biller to continue to pull money out of my account even though I told them numerous times that I didn’t even sign up for that service.
How can I file a claim? Adobe overcharged me after cancellation for almost 2 years. When I finally canceled, it was a total nightmare to get someone to help me. They owe me hundreds of dollars.
In reply to How can I file a claim?… by Jaqui B
Curious to watch how this progresses, and what type of remuneration (if any) will be required to make subscribers whole.
I've had a business subscription with Adobe for years, and have never tried to cancel, so I am not directly impacted, but I am aware of various complaints of colleagues and family on this (possibly illegal? and certainly questionable) business practice.
In reply to How can I file a claim?… by Jaqui B
It was extremely challenging for me to cancel the subscription with Adobe. I thought I had cancelled the subscription but kept getting charged for a platform I did not utilize. I also lost hundreds of dollars the past two year and interested in filing a claim.
This is so true!!
How to claim ? Does it also mean Adobe will pay interest on all the charges, interest rates have been very high for the last few years and since Adobe's subscription would use mostly store credit cards information on file, they should be liable for interest as well.
They also dont have option to remove the credit card.
They kept charging me as well for probably 2-3 years.
I have had just such an experience with my Adobe subscription. I chose the Monthly payment option. I decided to cancel the subscription, but was warned there would be a cancellation penalty. So I have kept the subscription active, even though I don't want it or use it.
I totally agree that Adobe should change its subscription model. They're the only vendor I can think of that defaults to Annual after a trial, and then it is not one you can cancel at any time. Very shady business practice Adobe!
I have had issues like this in the past as well, which cost me more money than I needed to spend and they also don’t let us know that there is a free version easily.
I think this best. Adobe force you to pay complete year of subscription fee if you try to cancel.
This is very good initiative .
FTC should check other big companies where the cancelation process is too tough.
How do I sign up
Adobe has good products. Too bad they they acted like this regarding cancellation. 70 plus for a cancellation fee. Seems a bit harsh. I will not use their products anymore.
Their "Annual paid monthly" stuff was not clear at all, and I got a cancellation fee after using the software for over a year. Thankfully I didn't have any continued charges like others have. A slimy practice all around, glad to see the screws getting turned on them.
How do I file a claim? They have made it quite difficult for me to cancel after the promotion period.
How do I file a claim? They have made it quite difficult for me to cancel after the promotion period.
Last year, we paid a little over $400 for Adobe, this year I got charged over $600. They may have good programs, but to me, it's a major rip-off. Hopefully, The FTC wins, for the consumers. If I find something else to replace it, at a lower cost, I will. Plus, if I have issues, I'll let the FTC know, and submit the proof to them. If more businesses and consumers did the same thing, I'd bet you'd see a drop in the price for businesses and consumers.
My office used the "monthly" annual subscription plan. I was surprised to learn that seat cancellation was only an option annually. One of the reasons I chose monthly is that our office size can fluctuate throughout the year. Given the size of our office and the amount of money we spend on software, this wasn't a huge issue, but it the terms weren't transparent when I subscribed. Given that Adobe is a software giant with a great product, the low-ball business practices and very, very poor customer support seem like a mismatch. It's something i would expect with fly-by-night businesses.
Please where can we follow up on the progress of this filing ? Is there a particular dateline for the hearing if this case ?
Where do I file a complaint regarding continual charges even though the subscription was canceled and I paid early termination fee. Can't believe a Fortune 500 company is getting away with these practices in 2024.
In reply to Where do I file a complaint… by Le Hong
Report fraud, scams, and bad business practices to the FTC at www.ReportFraud.ftc.gov.