WASHINGTON - The Federal Trade Commission (FTC) has initiated legal action against Adobe (NASDAQ:ADBE) Inc. and two of its executives for allegedly engaging in deceptive practices that made it difficult for customers to cancel software subscriptions and concealed the associated early termination fees. The complaint, filed by the Department of Justice on behalf of the FTC, accuses Adobe of trapping consumers into annual subscriptions with hidden fees and complex cancellation processes.
According to the FTC's Bureau of Consumer Protection, Adobe shifted to a subscription model in 2012, which now accounts for the majority of its revenue. The complaint alleges that Adobe promotes its "annual paid monthly" plan without clearly disclosing the early termination fee (ETF), which equates to 50% of the remaining balance if a subscription is canceled within the first year. The FTC contends that this information is not prominently displayed, instead buried in fine print or requiring users to hover over icons to discover the fee.
Consumer complaints to the FTC and the Better Business Bureau indicate that many were unaware of the ETF or the annual commitment of the "annual paid monthly" plan. Despite awareness of consumer confusion, Adobe is accused of continuing to obscure the ETF while steering customers toward this plan.
The FTC also alleges that Adobe's cancellation process is intentionally cumbersome, involving multiple web pages and resistance from customer service, leading to dropped calls, chat transfers, and continued billing even after consumers believed they had canceled.
The practices in question are said to violate the Restore Online Shoppers' Confidence Act, and the FTC aims to protect consumers from such illegal business practices. The civil penalty complaint was filed in the U.S. District Court for the Northern District of California, with a unanimous Commission vote of 3-0 to refer the case to the DOJ.
The information for this report is based on a press release statement from the FTC.
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