Proactive Investors - Adobe Inc (NASDAQ:ADBE) is being sued by the US government which alleges the software company deceived consumers about early termination fees for its most popular subscription plan and inhibited cancellations.
The Federal Trade Commission (FTC) said on Monday it is taking action against the Photoshop and Acrobat-maker and two of its executives, vice president Maninder Sawhney and president of the company’s digital media business David Wadhwani, with the Department of Justice filing the complaint in federal court.
The complaint alleges Adobe pushed consumers towards its “annual paid monthly” subscription plan without adequately disclosing that cancelling the plan within the first year would cost the consumer hundreds of dollars.
It claims Adobe buries the early termination fee and its amount, which is 50% of the remaining monthly payments when a consumer cancels their plans within the first year, in fine print and behind textboxes and hyperlinks.
Further, it alleges Adobe used the early termination fee to deter customers from cancelling their subscriptions, including resistance and delay from Adobe’s customer service representatives.
“Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles,” director of the FTC’s Bureau of Consumer Protection Samuel Levine commented.
“Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel. The FTC will continue working to protect Americans from these illegal business practices.”
Adobe is yet to respond to the lawsuit.
Shares of the company traded 2.4% lower at about $513 in the early afternoon on Monday.