AceBreakingNews – The US government is suing Adobe, accusing the design software giant of “trapping” customers into year-long subscriptions through concealing hefty termination fees and making it difficult for members to cancel.
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The Federal Trade Commission (FTC) has alleged that the Photoshop and Acrobat maker buries fees—which sometimes reach hundreds of dollars—and important terms in its ‘annual paid monthly’ subscription in fine print or behind hyperlinks and text boxes.
The lawsuit alleges that Adobe calculates early termination fees as 50 per cent of the remaining payments when consumers cancel in their first year, in the complaint filed on Monday, local time.
Adobe said they will refute the FTC’s claims in court.
“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. Loading…
“Subscription services are convenient, flexible and cost effective to allow users to choose the plan that best fits their needs, timeline and budget,” Mr Rao said.
Subscriptions for Adobe accounted for $US4.92 billion ($7.4 billion), or 95 per cent, of the company’s $US5.18 billion of revenue, in the quarter ending March 1.
According to the lawsuit, Adobe forces subscribers who want to cancel online to navigate unnecessarily through numerous pages, while those cancelling by phone are often disconnected, are forced to repeat themselves to multiple representatives, and encounter “resistance and delay” from those representatives.
“Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles,” said Samuel Levine, director of the FTC consumer protection bureau.
“Americans are tired of companies hiding the ball during subscription sign-up and then putting up roadblocks when they try to cancel.”
In addition to Adobe, two company executives have also been named as defendants in the complaint: David Wadhwani, the president of digital media business, and Maninder Sawhney, a senior vice president in digital sales.
The FTC accused Adobe of violating the Restore Online Shoppers’ Confidence Act, a 2010 federal law barring merchants from imposing charges, including for automatic subscription renewals, unless they clearly disclose material terms and obtain customers’ informed consent.
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