Feds Sue Adobe for ‘Trapping’ Customers in Long, Expensive Subscriptions

The U.S. government sued Adobe on Monday for allegedly “trapping” customers in its default, most lucrative subscription plan. In a complaint, the Department of Justice (DOJ) writes that Adobe locks customers into a year-long agreement that’s not effectively disclosed as such, and “ambushing” users with hefty hidden fees when they try to cancel.

The DOJ specifically calls out the “Annual, Paid Monthly” or APM plan, which Adobe presents as the default option for several software products. The APM plan allows users to pay the lowest amount on the day they sign up. However, the complaint alleges Adobe hides an early termination fee (ETF) that can cost users hundreds of dollars depending on when they cancel.

“During enrollment, Adobe hides material terms of its APM plan in fine print and behind optional textboxes and hyperlinks, providing disclosures that are designed to go unnoticed and that most consumers never see,” reads the DOJ’s complaint. “Adobe then deters cancellations by employing an onerous and complicated cancellation process. As part of this convoluted process, Adobe ambushes subscribers with the previously obscured ETF when they attempt to cancel.”

To buy Creative Cloud, Adobe’s package of landmark software products, the APM (below it’s titled “Yearly, Billed monthly”) plan appears as $59.99/month. This allows customers to pay the lowest amount on sign-up day, compared to a “Monthly” plan of $89.99/month, or a “Yearly, Billed Upfront” plan of $659.88. The DOJ alleges that Adobe doesn’t do enough to disclose that this is a year-long contract with fees for early termination, and says the company puts up other roadblocks to canceling.

Customers who cancel their APM plans will be charged 50% of the “remaining contract obligation.” according to Adobe’s terms and conditions. So if you cancelled your Creative Cloud subscription after one month of service, you’d lose access to Creative Cloud that month and have to pay roughly $330 to cancel.

The complaint cites testimonies from consumers who were confused by Adobe’s plan when they signed up. They were allegedly unaware that this plan had to continue for a year, despite the name, and that a cancellation fee existed. The DOJ alleges that Adobe was aware of this confusion, receiving multiple complaints from the Better Business Bureau and customers over the years. However, Adobe has continued offering the plan without much further clarification.

“We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process,” said Dana Rao, Adobe’s general counsel and chief trust officer, in a press release sent to Gizmodo. “We will refute the FTC’s claims in court.”

The lawsuit targets not only Adobe but also two executives allegedly responsible for these lock-in practices: Senior Vice President of Digital Go To Market & Sales, Maninder Sawhney, and President of Digital Media Business, David Wadhwani. This is part of an increased effort by the U.S. government to crack down on hidden fees. Last month, the DOJ sued to break up Ticketmaster and Live Nation, one of the most public offenders in the war on hidden fees.