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Feds Accuse Adobe of Practices That Harm Consumers

In a new lawsuit, two U.S. government agencies have accused Adobe of making it very hard for users to cancel Adobe subscriptions, which also contained hidden or obscured fees.

(TNS) — Welcome to Adobe, you can subscribe any time you like, but you can never leave.

Well, maybe not never, but customers who subscribed to San Jose image-editing technology powerhouse Adobe's software found it very hard, and potentially very costly, to cancel, two U.S. government agencies claim in a newly filed lawsuit.

"Adobe allegedly protects its subscription revenues by thwarting subscribers' attempts to cancel, subjecting them to a convoluted and inefficient cancellation process filled with unnecessary steps, delays, unsolicited offers and warnings," the U.S. Department of Justice said Monday in a press release after joining the Federal Trade Commission in suing Adobe on Monday.

Adobe also imposed on millions of subscribers a hidden fee costing up to hundreds of dollars for early cancellations, according to the lawsuit, which also named as defendants David Wadhwani, the company's president of digital media business, and Maninder Sawhney, its vice-president of digital sales.

"For years, Adobe has profited from this hidden fee, misleading consumers about the true costs of a subscription and ambushing them with the fee when they try to cancel, wielding the fee as a powerful retention tool," the Justice Department claimed.

Adobe's chief lawyer Dana Rao disputed the government agencies' claims and promised the company would refute them in court, calling subscriptions "convenient, flexible and cost effective" in allowing customers to choose a plan best for their needs and budget.

"Our priority is to always ensure our customers have a positive experience," Rao said in a statement posted Monday by Adobe. "We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process."

The lawsuit accuses Adobe of breaking federal consumer-protection law, and seeks potential refunds and restitution for subscribers, along with unspecified fines and a court order barring the company from allegedly continuing to victimize customers.

Adobe, worth $232 billion in the stock market, buried important information about subscriptions — including the "hefty" early-termination fee — by using fine print and web links "designed to go unnoticed and that most consumers never see," the lawsuit filed in U.S. District Court in San Francisco claimed.

Before Adobe pivoted to monthly and annual subscriptions in 2012, its customers bought software under "perpetual licensing" agreements that let buyers use the products indefinitely, the lawsuit noted. Wadhwani was one of the "chief architects" of the switch to subscriptions, the lawsuit alleged.

The firm's revenue for subscription software including Acrobat, Photoshop, Illustrator, and Creative Cloud, nearly doubled to $14.2 billion last year from $7.71 billion in 2019, according to the lawsuit.

Adobe's process for subscribers fails to "clearly and conspicuously" disclose that a subscription lasts for a year, and that canceling early brings a fee, the lawsuit claimed.

"In numerous instances, subscribers who have requested to cancel through Adobe's customer service believe they have successfully cancelled but continue to be charged," the lawsuit alleged. "Some of these subscribers do not realize for months that Adobe is continuing to charge them, and only learn about the charges when they review their financial accounts."

The company's subscription practices generated many complaints to the Better Business Bureau and on its own support forums, according to the lawsuit. Consumers reported that they "did not understand what they were signing up for and were surprised to learn they were enrolled in a plan that requires a one-year commitment," and that an early-cancellation fee could be imposed, the lawsuit said.

Adobe customers trying to cancel online "had to navigate numerous pages with multiple options, much of which is wholly unnecessary to honor consumers' cancellations requests," the lawsuit alleged.

One complaint cited in the lawsuit said, "Adobe literally will not let me cancel my subscription," and explained that in trying to end their subscription via Adobe's website they were put through a loop where they had to repeatedly sign in but could never progress to canceling.

Subscribers seeking to cancel via phone or chat "have been subjected to a time consuming and burdensome process," the lawsuit claimed.

Another complaint cited in the lawsuit said the customer had contacted Adobe several times over a few months, by phone and chat, and each time was faced with "rigorous negotiation" and an offer of two free months of a subscription instead of cancellation.

Adobe was aware of the complaints and knew consumers were often confused about subscription terms, the lawsuit claimed. The company and its executives also knew of "significant government and regulatory scrutiny into its subscription enrollment and cancellation practices," but the lawsuit alleged Adobe "nevertheless persisted in its violative practices to the present day."

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