US Government Sues Adobe For Cancellation Fees And Difficulties In Canceling Subscriptions
JAKARTA - The US government sued Adobe on Monday, June 17. They accuse Photoshop and Acrobat makers of harming consumers by hiding huge termination fees in their most popular subscription packages, as well as complicating the subscription cancellation process.
In a lawsuit filed in the federal court of San Jose, California, the Federal Trade Commission (FTC) said that Adobe hides the costs, which sometimes amount to hundreds of dollars, as well as other important conditions in their "annual pair monthly" subscription package in small prints, or behind text boxes and hyperlinks.
According to the lawsuit, Adobe calculated an early termination fee of 50% of the remaining payments when consumers canceled subscriptions in their first year. The FTC also stated that Adobe forces customers who wish to cancel online to go through multiple pages, while those who cancel by telephone are often cut off, have to repeat explanations to several representatives, and face "resistances and delays" of the representative.
Two Adobe executives also became defendants: David Wadhwani, president of the digital media business, and Maninder Sawhney, senior vice president of digital sales.
"Adobe traps customers in annual subscriptions through hidden early termination fees and many cancellation hurdles," said Samuel Levine, director of the FTC consumer protection bureau. "Americans are fed up with companies hiding terms during subscription registrations and then creating obstacles as they try to cancel."
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Dana Rao, general adviser and chief Adobe trustee, said the San Jose-based company would dispute the FTC's claims in court.
"These subscription services are convenient, flexible, and cost effective to allow users to choose the packages that best suit their needs, schedule, and budget," Rao said. "We are transparent with the terms and conditions of our subscription agreement and have a simple cancellation process."
The subscription accounted for Adobe's 4.92 billion dollars (IDR 80.7 trillion), or 95%, of Adobe's 5.18 billion dollars (IDR 85 trillion) revenue in the quarter ended March 1. The FTC accused Adobe of violating the Online Shoppers' Confidence Act, a 2010 federal law prohibiting traders from applying fees, including for automatic subscription updates, unless they disclose material terms clearly and obtain customer consent that have been informed.