DOJ Files Lawsuit Against Adobe, Alleging Hidden Cancellation Fees to Deter Consumer Unsubscriptions

The Department of Justice (DOJ) has taken legal action against Adobe, accusing the company of not clearly disclosing the substantial fees incurred for early termination of subscription services, thereby hindering consumers from cancelling their subscriptions midway.

Adobe's subscription model allows users to pay on a monthly basis, but what might not be immediately apparent to many is that this monthly payment plan is actually for an annual subscription. This marketing strategy, long utilized by Adobe, mandates that users wishing to cancel their subscription before the completion of one year pay a cancellation fee, which is half the cost of the annual subscription fee (minus any payments already made, with detailed calculation methods to be provided later in the document).

Many users find themselves surprised by the hefty cancellation fee upon attempting to unsubscribe, having assumed that a monthly payment plan implied the flexibility to cancel after a month without significant penalties.

Adobe justifies these fees by arguing that the prices offered to users are discounted rates for annual subscriptions, divided into 12 monthly payments. Consequently, if a user subscribes and then cancels, they must pay the cancellation fee since they've already benefited from the discounted rate.

As of June 17, the DOJ, acting on the FTC's recommendation, has accused Adobe of failing to adequately inform users about the substantial fees associated with early termination of their subscription services. This allegation suggests Adobe's intention to discourage consumers from cancelling their subscriptions.

The DOJ's filings highlight that Adobe's subscription revenue doubled from 7.71 billion in 2019 to7.71billionin2019to14.22 billion in 2023, a significant portion of which includes cancellation fees.

Adobe's subscription terms state that if a user cancels within the first 14 days of subscription, the initial subscription fee is fully refunded. However, if cancellation occurs any time during the year-long subscription period, the user immediately loses access to the product for that month and is required to pay 50% of the remaining monthly fees as a cancellation fee.

Given the high cost of Adobe's services, many users end up paying hundreds of dollars to terminate their subscriptions early—a costly affair, but still preferable to paying the full price for services no longer needed.

The DOJ also emphasized that Adobe's strategy only becomes apparent to users at the point of attempting to cancel their subscription, with the company profiting from cancellation fees or deterring users from switching to other products.

In response to the allegations, Adobe defended its subscription model, claiming it offers not only a more affordable price but also flexibility and cost-effectiveness. The company insists that its terms of service have always been transparent and that it is straightforward for users to cancel their subscriptions.