Federal regulators are suing the maker of the popular Photoshop editing software.
The Federal Trade Commission on Monday announced it is taking action against Adobe and two of its executives for "deceiving consumers" by making it difficult to cancel software subscriptions and hiding the early termination fee for its most popular plan.
A complaint filed in federal court by the U.S. Department of Justice on the FTC's referral alleged Adobe pushed consumers toward its "annual paid monthly" subscription without adequately informing consumers that canceling the plan within the first year could cost "hundreds of dollars." Along with Adobe, the complaint names David Wadhwani, president of Adobe’s digital media business, and Sawhney is an Adobe vice president, and Maninder Sawhney, an Adobe vice president.
Adobe used to sell its Creative Suite software, as well as standalone products like its Photoshop photo-editing software and its Premiere Pro video-editing software, as one-time purchases. Consumers could install the software on their computers and continue using it indefinitely. In 2012, the company shifted to the Creative Cloud subscription model, requiring consumers to pay to use its software on a monthly basis.
“Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel. The FTC will continue working to protect Americans from these illegal business practices.”
According to the complaint, Adobe's actions violate the Restore Online Shoppers’ Confidence Act.
Adobe allegedly pushes consumers into its "annual paid monthly" plan by selecting it as the default option and prominently displaying the "monthly" cost during signup, but "buries" the early termination fee (ETF), which amounts to 50% of the remaining monthly payments when the subscription is canceled within the first year.
The FTC said it has received consumer complaints about the ETF. According to the complaint filed in court, the FTC alleged that Adobe was also aware of consumers' confusion with the ETF, but continued its practice of steering consumers into the "annual paid monthly" plan while "obscuring" the ETF in small print or by requiring consumers to hover over a small icon to find the disclosure.
The complaint also alleges that Adobe makes the cancellation process difficult for consumers. When consumers try to cancel online, they are allegedly forced through numerous web pages. When they reach out to customer service to cancel, they encounter "resistance and delay" from representatives.
"Consumers also experience other obstacles, such as dropped calls and chats, and multiple transfers," the FTC said. "Some consumers who thought they had successfully cancelled their subscription reported that the company continued to charge them until discovering the charges on their credit card statements."
With TMX
