By Jonathan Stempel
(Reuters) -The U.S. government sued Adobe (NASDAQ on Monday, accusing the maker of Photoshop and Acrobat of harming consumers by hiding high termination fees on its most popular subscription plan and making it difficult to cancel subscriptions.
In a lawsuit filed in federal court in San Jose, California, the Federal Trade Commission said Adobe hides in fine print the fees, which sometimes reach hundreds of dollars, and other important terms of its “annual paid monthly” subscription plan. “, or behind text boxes and hyperlinks.
According to the complaint, Adobe calculates early termination fees as 50% of remaining payments when consumers cancel in their first year.
The FTC also said that Adobe forces subscribers who want to cancel online to unnecessarily navigate through numerous pages, while those who cancel by phone are often disconnected, forced to repeat the same thing to multiple representatives, and encounter “resistance.” and delay” on the part of those representatives.
Two Adobe executives are also charged: David Wadhwani, president of the digital media business, and Maninder Sawhney, senior vice president of digital sales.
“Adobe locked customers into one-year subscriptions through hidden early termination fees and numerous cancellation hurdles,” Samuel Levine, director of the FTC's consumer protection bureau, said in a statement. “Americans are tired of companies hiding the ball during subscription sign-up and then throwing up roadblocks when they try to cancel.”
San Jose-based Adobe did not immediately respond to requests for comment. In December it said it had been cooperating with an FTC investigation into its subscription models.
Subscriptions accounted for $4.92 billion, or 95%, of Adobe's $5.18 billion in revenue in the quarter ended March 1.
The FTC accused Adobe of violating the Restoring Online Shoppers' Confidence Act, a 2010 federal law that prohibits merchants from imposing fees, including for automatic subscription renewals, unless they clearly disclose the material terms and obtain informed consent of consumers.
Monday's lawsuit seeks civil penalties, an injunction against future wrongdoing and other remedies.
The case is United States v. Adobe Inc et al, United States District Court, Northern District of California, No. 24-03630.
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