- The DOJ, prompted by an FTC referral, has sued Adobe for deceptive practices in subscription contracts.
- Adobe is accused of hiding early termination fees and complicating the cancellation process.
- Executives Mininder Sawhney and David Wadhwani are named in the lawsuit for their roles in the alleged violations.
The US Department of Justice (DOJ) has filed a federal lawsuit against software company Adobe, following a referral from the Federal Trade Commission (FTC).
The lawsuit claims that Adobe and two of its top executives, Mininder Sawhney and David Wadhwani, used deceptive practices by concealing fees and making it difficult for customers to cancel their subscriptions.
Hidden Fees and Contract Terms
According to the DOJ’s complaint, Adobe has been directing customers towards its annual plans, which are billed monthly, by pre-selecting this option during the signup process.
The complaint alleges crucial details, such as the early termination fee for canceling within the first year, are hidden during the signup process.
Other important information, like billing and renewal terms and the subscription length, are said to be obscured behind icons or buried in small print on Adobe’s website.
Customers who cancel their annual contracts early face a hefty fee, amounting to 50% of the remaining payments.
This fee can cost customers hundreds of dollars, and the complaint suggests that Adobe’s practices are deliberate attempts to make it difficult for consumers to understand what they’re signing up for and to cancel their subscriptions if they choose to do so.
Complicated Cancellation Process
The DOJ’s complaint describes how Adobe makes the cancellation process unnecessarily complicated, likening it to an “obstacle course of screens and clicks.”
Customers attempting to cancel their subscriptions reportedly face dropped calls, interrupted chats, and multiple transfers, further complicating the process.
FTC’s Stance on Subscription Models
The FTC has made it clear that it views these practices as violations of the Restore Online Shoppers’ Confidence Act (ROSCA) and the FTC Act.
An announcement from the FTC summarizes the issue: “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.”
In a statement directed at companies using subscription models, the FTC emphasized that the lawsuit against Adobe is a signal that it will continue to fight against hidden terms and conditions, hidden fees, and complex cancellation procedures.
Implications for Adobe and Other Companies
This lawsuit highlights the importance of transparency and fairness in subscription-based business models.
For Adobe, the outcome of this case could mean significant changes in how it presents subscription terms and handles cancellations.
For other companies, it serves as a warning to review their own practices to ensure they comply with FTC regulations.
What’s Next?
As the lawsuit progresses, it will be important to watch how Adobe responds to these allegations and what changes, if any, they implement in their subscription processes.
The case also underscores the ongoing efforts by regulatory bodies to protect consumers from deceptive business practices.
Consumers and companies alike should take note of this lawsuit as a pivotal moment in the regulation of subscription services and the protection of consumer rights.
