Software giant Adobe accused of 'trapping customers'

The US government has sued software giant Adobe, accusing it of violating consumer protection laws with "hidden" termination fees and a convoluted cancellation process.

The Federal Trade Commission (FTC) said the firm had failed to clearly disclose its terms to customers, including the year-long length of a subscription and charges that would be triggered for cancelling early.

In its complaint, the agency said Adobe had refused to modify its behaviour because it would hurt the company financially.

Adobe disputed the claims and said it would fight the lawsuit.

"We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process," said Dana Rao, general counsel and chief trust officer.

"We will refute the FTC’s claims in court," he said.

Adobe, founded in 1982, is known for software used to edit photos and PDFs, including Adobe Photoshop.

It adopted a subscription-based sales model around 2012 for its offerings, asking customers to pay a monthly or annual fee.

But the company's sign-up process is unclear, according to the complaint, in some cases failing to disclose that customers are making a commitment to pay for a year and not stating the cost of cancelling early, even though the fee can amount to hundreds of dollars.

If customers try to cancel, the company also allegedly takes them through a "convoluted process", requesting re-entry of their password and navigation past multiple pop-up screens, the complaint suggests.

"Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles," Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a press announcement.

"Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel," Mr Levine added.

The practices cited in the complaint are similar to ones regulators identified in a lawsuit brought against Amazon last year and generated numerous complaints to outlets such as the Better Business Bureau.

In some cases, customers believed they had successfully completed the process, only to keep being charged, the agency alleged in the complaint, which was filed in federal court in California.

In addition to Adobe, the complaint also names Maninder Sawhney, senior vice president of digital go to market & sales since 2018 and and David Wadhwani, president of Adobe's digital media business.

The government said it had started to look into the issue in 2022 but alleged that the "defendants have repeatedly decided against rectifying some of Adobe’s unlawful practices because of the revenue implications."

It asked the court to bar Adobe from its practice and impose financial penalties for each violation of the law.