U.S. Government Sues Adobe for Hidden Termination Fees When Canceling Subscription

The United States Department of Justice and the Federal Trade Commission today levied a lawsuit against Adobe [PDF] for imposing a hidden termination fee on subscribers who want to cancel their Adobe plans. Adobe is accused of forcing subscribers to "navigate a complex and challenging cancellation process designed to deter them from cancelling subscriptions they no longer wanted."

Adobe offers its Creative Cloud products on a subscription basis, with fees that are paid monthly. A monthly payment suggests that it's possible to cancel anytime, but that's not how Adobe works because most customers are actually locked into a hidden annual agreement.

Customers who sign up for a free trial and are then charged and signed up to the default Creative Cloud plan, which is actually an annual contract. Canceling the annual contract requires customers to pay a lump sum of 50 percent of the "remaining contractual obligation" to cancel, despite the fact that service ends that month.

Adobe does let customers sign up for a month-to-month subscription plan, but at a higher cost than the annual contract that's paid monthly, and the difference is not always clear to new or existing customers. Adobe even has a whole help page because of the confusing nature of its subscription. If you look at the Adobe website, for example, Adobe lists a $60/month fee for accessing its full suite of apps, but that's only if you agree to the annual contract. A true month-to-month plan that you can cancel anytime is $90/month, and if you pay for a year upfront, you get no money back when you cancel after a 14-day period.

According to the DoJ, Adobe's setup violates the Restore Online Shoppers' Confidence Act (ROSCA) through the use of fine print and inconspicuous hyperlinks to hide information about the Early Termination Fee.

The complaint alleges that 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 complaint alleges that Adobe has further violated ROSCA by failing to provide consumers with a simple mechanism to cancel their recurring, online subscriptions. Instead, 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 lawsuit asks for "unspecified amounts of consumer redress" along with monetary civil penalties and a permanent injunction that would prevent Adobe from continuing to use hidden fees to thwart customer cancelations.