Feds sue Adobe for 'hidden' early cancellation fees

Signage on Adobe headquarters in San Jose, California, US, on Thursday, Nov. 30, 2023. Adobe Inc. is scheduled to release earnings figures on December 13. Photographer: David Paul Morris/Bloomberg via Getty Images

Adobe, the company behind PDFs and popular editing software such as Photoshop, is facing a federal lawsuit for alleged violations stemming from the company's early cancellation fees, which has frustrated users trying to end their subscriptions but who are still getting charged. 

Both the Justice Department and the Federal Trade Commission sued the San Jose-based company and two of its executives, Maninder Sawhney of San Jose and David Wadhwani of San Francisco on June 17.

Sawhney serves as Adobe's senior vice president of Digital Go To Market & Sales. Wadhwani is Adobe's president of Digital Media Business and reports directly to the CEO.

The complaint states that Adobe violated the Restore Online Shoppers' Confidence Act after they allegedly purposely complicated the process of cancelling their program subscriptions and hiding an "early termination fee" for millions of users who managed to do so.

The lawsuit accuses Adobe, Wadhwani, and Sawhney of profiting off the hidden cancellation fees, which mislead customers about their products' true cost, "ambushing" them with the termination fee and using the fee as a "powerful retention tool."

In other words, users who signed up for Adobe's subscription service weren't clearly told that if they canceled their subscription, they would have to pay an early termination fee, according to the lawsuit.  

"Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles," FTC's Bureau of Consumer Protection Director Samuel Levine said in a statement. "Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel."

It's an allegation many users online worldwide have attested to personally, voicing their frustrations about how complicated the process is.

Several customers on social media voiced their own experiences, calling the fee "exploitative" or even "demonic" when the news first broke that the Justice Department and FTC were filing a lawsuit.

Others referred to their attempts to cancelling their Creative Studio subscription as complicated as trying to "break a pact with Satan himself."

"I canceled my Adobe subscription last week after a decade….I was slapped with this fine ($139.97) just for canceling. Glad to hear [the lawsuit] is happening," said one user.

Court records show that Adobe executives have yet to retain attorneys. Additionally, the lawsuit specifying the allegations against Sawhney and Wadhawni is heavily redacted, which makes it impossible to understand the specifics of the allegations.

In a statement responding to the allegations, Adobe said they would refute the claims in court, saying their subscriptions are "convenient, flexible, and cost-effective."

Adobe said their cancellation process is "just a four-step process" that can be clicked through "in less than a minute."

"We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process," wrote Dana Rao, Adobe's general counsel and chief trust officer.