Adobe Settles DOJ Lawsuit over Deceptive Subscription Practices

Adobe, the maker of Photoshop and Acrobat, has agreed to pay a $75 million fine to settle a Department of Justice lawsuit alleging it hid hefty termination fees from consumers who subscribed to its software, including through advertised free trials.

According to the DOJ’s 2024 complaint, filed upon referral from the FTC, Adobe enrolled consumers in an annual subscription in which subscribers were told they could pay monthly without adequately disclosing that canceling the plan in the first year triggered an expensive early termination fee.

Adobe then used the early termination fee – calculated as 50% of the remaining monthly payments, potentially hundreds of dollars – to deter customers from canceling their software subscriptions, among other tactics such as forcing consumers to navigate through numerous hurdles and webpages in order to cancel on the company’s site, the Justice Department alleged.

Both alleged practices – failing to adequately disclose the early termination fee and then making it difficult for subscribers to cancel – violated the Restore Online Shoppers’ Confidence Act, according to the DOJ’s lawsuit.

In addition to the $75 million civil penalty, Adobe will provide $75 million in free services to an unspecified number of “affected customers,” according to a statement on its website, which says that the company will contact customers who “qualify” for the free services.

“While we disagree with the government’s claims and deny any wrongdoing, we are pleased to resolve this matter,” the company said, adding that, “In recent years, we have made our sign-up and cancellation process even more streamlined and transparent.”

Here’s one reason Adobe might be pleased with the result: The $75 million fine amounts to less than 1% of the $14 billion in subscription-based revenue the company reported in 2023 according to the DOJ. Meanwhile, it is able to retain customers by offering them free services.

Subscription subterfuge

Over the years, TINA.org has taken a number of actions to stop the deceptive marketing of autorenewing memberships and subscriptions.

TINA.org has investigated a multitude of subscription-based companies, filing complaints with the FTC (and others) against Savage X Fenty, Adore Me, FabKids, HelloFresh and, most recently, Homeaglow. In addition, TINA.org has filed a federal court brief and comments in support of the FTC’s efforts to tackle deception in the subscription services industry.

Now is the time for your voice to be heard.

The FTC is currently seeking public comment on whether it should amend its Negative Option Rule. If you have ever signed up for a free trial only to discover a bevy of unexpected charges on your credit card a few months later or found it difficult or impossible to cancel a subscription, the FTC wants to hear from you.

The deadline to submit a comment is April 13. You can do so here.

Find more of our coverage on subscriptions.