The U.S. Department of Justice and the Federal Trade Commission (FTC) have initiated legal action against Adobe Inc. (ADBE) for imposing undisclosed termination fees on subscribers seeking to cancel their Adobe plans.
In a move targeting the software giant and two of its executives, Maninder Sawhney and David Wadhwani, the FTC asserts that Adobe misled consumers by concealing the early termination fees associated with its most popular subscription plans, and by creating obstacles for cancellation.
David Wadhwani serves as the president of Adobe's Digital Media business, while Maninder Sawhney holds the position of vice president at the company.
The FTC's complaint, filed in a federal court in San Jose, California, alleges that Adobe did not sufficiently inform customers of significant early termination charges, which could amount to hundreds of dollars, at the time of signing up for "annual, paid monthly" subscription plans.
"Adobe entrapped customers into year-long subscriptions with hidden early termination fees and numerous cancellation barriers," stated Samuel Levine, Director of the FTC's Bureau of Consumer Protection. "Americans are fed up with companies obscuring crucial details during subscription signups and then erecting hurdles when they attempt to cancel. The FTC remains committed to safeguarding Americans from these illicit business practices."
Since 2012, Adobe has predominantly shifted to a subscription-based model, compelling consumers to make recurring payments for access to its widely-used software. Currently, subscriptions constitute the bulk of the company's revenue.
