Adobe reaches $150 million settlement of US lawsuit over termination fees, subscription cancellations

The accord requires Adobe to pay a $75 million civil fine, and provide $75 million in free services to customers. Court approval is required.

In a ⁠June 2024 complaint, the Justice Department and Federal Trade Commission accused Adobe of burying termination fees for its popular "annual paid monthly" subscription plan, sometimes reaching hundreds of dollars, in the fine print or behind text boxes and hyperlinks.

They also said the San Jose, California-based company made cancelling subscriptions a hassle, forcing subscribers who wanted to cancel online to wade through numerous pages, and subscribers who wanted to cancel by phone to repeat themselves to multiple representatives and encounter "resistance and delay."

Adobe was accused of violating the Restore Online Shoppers' Confidence Act, a 2010 law barring merchants ‌from ⁠imposing charges, including for automatic subscription renewals, without disclosing material terms clearly and obtaining customer consent.

The settlement also resolved government claims against two Adobe executives.

"American consumers deserve the right to make informed choices when deciding where to spend their hard-earned money," Brett Shumate, head of the Justice Department's civil division, said in ⁠a statement.

In a statement on its website, Adobe said it has in recent years streamlined its sign-up and cancellation processes and made them more transparent.

"While we disagree with the government's claims and deny any wrongdoing, ⁠we are pleased to resolve this matter," Adobe said.

Subscriptions accounted for 97% of Adobe's $6.4 billion in revenue for the quarter ending February 27.

Adobe's settlement was announced one day after Chief Executive ⁠Shantanu Narayen said he will step down after more than 18 years in the role.

The company's shares have fallen this year, reflecting investor concern about how artificial intelligence will affect Adobe's business prospects.