Adobe, the maker of Photoshop, has agreed to a settlement with the U.S. government over claims that it “trapped customers” using “hidden early termination fees and numerous cancellation hurdles.”
Adobe, the maker of Photoshop and other popular content creation tools, has agreed to a large settlement with the U.S. government over claims that the company "trapped customers" using "hidden early termination fees and numerous cancellation hurdles.
"According to a statement from Adobe, the settlement includes a $75 million payment to the government, and $75 million in "free services" for some customers. Here’s what we know: The Federal Trade Commission filed a lawsuit against Adobe in 2024, accusing the company of pushing consumers to choose its "annual paid monthly" subscription "without adequately disclosing that cancelling the plan in the first year could cost hundreds of dollars," according to the FTC. RELATED: There's billions of dollars in unclaimed money in the US - Check to see if you're owed moneyThe complaint said when customers bought a subscription through the company’s website, Adobe defaulted customers to its "annual paid monthly" subscription plan. The FTC claims Adobe prominently displayed the plan’s "monthly" cost during enrollment, but buried the early termination fee and its amount, which was 50% of the remaining monthly payments if the subscription is canceled in its first year. According to the FTC, Adobe’s disclosures were "buried on the company’s website in small print" or required "consumers to hover over small icons to find the disclosures."According to Reuters, 95% of Adobe’s revenue in the first quarter of 2024 came from subscriptions. "Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles," Samuel Levine, former director of the FTC’s Bureau of Consumer Protection, said when the suit was filed. "Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel."RELATED: Federal court terminates Biden-era student loan plan affecting millions nationwideThe FTC said Adobe continued the practice despite numerous consumer complaints to the FTC and Better Business Bureau, and also purposely made the cancellation process difficult for customers. "When consumers reach out to Adobe’s customer service to cancel, they encounter resistance and delay from Adobe representatives," the FTC said in 2024. "Consumers also experience other obstacles, such as dropped calls and chats, and multiple transfers. Some consumers who thought they had successfully canceled their subscription reported that the company continued to charge them until discovering the charges on their credit card statements."Adobe addressed the settlement in a statement Friday on its website. The company denies any wrongdoing, but said "we are pleased to resolve this matter."Adobe says it will provide $75 million worth of free services to qualifying customers. Those customers will be notified directly after the court accepts the settlement, Adobe said. It’s unclear which free services some customers will receive, and how many customers will get them. "Adobe’s mission is empowering everyone to create," the company’s statement reads. "To support that mission, we are committed to delivering the best products alongside flexible offerings that meet the diverse needs of our customers. Our subscription model was designed to accelerate innovation while making our technology more accessible — enabling us to deliver continuous updates, cloud-based features and new services at a more affordable price."We look forward to continuing to build innovative tools and platforms that unleash creativity, productivity and personalized customer experiences."
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