The maker of Photoshop and Acrobat, Adobe Inc. (NASDAQ:ADBE), is being sued by the US Federal Trade Commission for allegedly hiding expensive cancellation penalties from customers and making it difficult to cancel subscriptions.
The Federal Trade Commission said in a lawsuit brought before a federal court in San Jose, California, that Adobe (NASDAQ:ADBE) conceals fees and other important details of its annual paid monthly membership plan in small print or behind text boxes and hyperlinks. These costs can amount to hundreds of dollars.
Users of Adobe products have long complained about the expense of cancelling a membership. The annual cost of using Adobe’s software suite for people can exceed $700.
Subscriptions must be cancelled within two weeks after purchase in order to receive a full refund; otherwise, a prorated penalty will be assessed. Other digital providers, like Netflix Inc. (NASDAQ:NFLX) and Spotify Technology (NYSE:SPOT), do not impose cancellation fees.
Regulators declared that management of the company is aware that clients sometimes misunderstand the terms of the agreement. Additionally, they pointed out that Adobe’s (NASDAQ:ADBE) subscription pricing approach discourages cancellation and encourages users to sign longer-term agreements.
Samuel Levine, director of the FTC consumer protection department, said, “Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous hurdles to cancel.” “Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel.”
The lawsuit claims that Adobe’s conduct violates a 2010 consumer protection law designed to protect online shoppers.
Under the same statute, the FTC sued Amazon Inc. (NASDAQ:AMZN) last year for allegedly deceiving customers into signing up for its Prime membership service and deliberately complicating the cancellation process.
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