Adobe agrees to $150M settlement with DOJ over alleged subscription violations

Adobe settlement overview:

• Who: Software company Adobe agreed to a $150 million settlement to resolve a lawsuit filed by the U.S. Department of Justice (DOJ).
• Why: The DOJ alleged Adobe violated the Restore Online Shoppers’ Confidence Act (ROSCA) by using deceptive subscription practices.
• Where: The Adobe DOJ lawsuit was filed in California federal court.

Adobe has agreed to pay $150 million to resolve allegations it violated the Restore Online Shoppers’ Confidence Act with its subscription practices, according to the U.S. Department of Justice.

The DOJ, acting on a referral from the Federal Trade Commission, filed a proposed order on March 13 against Adobe and two of its executives, David Wadhwani and Maninder Sawhney.

The proposed order requires Adobe to pay $75 million in civil penalties and provide an additional $75 million in free services to resolve allegations that its subscription practices violated ROSCA.

The DOJ alleged Adobe violated ROSCA by using fine print and inconspicuous hyperlinks to hide key information about its subscription plans, including details about early termination fees that customers may be charged when canceling.

The government also alleged Adobe made it difficult for subscribers to cancel, subjecting them to convoluted and inefficient processes with unnecessary steps, delays, unsolicited offers and warnings.

These practices, often referred to as “dark patterns,” were allegedly overseen by Wadhwani and Sawhney in their leadership roles.

Adobe settlement includes $75M in free services, changes to cancellation practices

Under the terms of the proposed settlement, Adobe must pay $75 million in civil penalties to the U.S. Treasury and provide an additional $75 million in free services to customers.

The agreement also requires Adobe to clearly disclose any early termination fee and explain how the fee is calculated before customers enroll in a subscription.

These protections also apply to the transition from free trials to paid memberships. For free trials lasting longer than seven days, Adobe must notify customers before their subscription converts into a paid plan that includes an early termination fee.

Adobe is also required to provide simple and easy ways for subscribers to cancel their subscriptions.

Assistant Attorney General Brett A. Shumate, head of the DOJ’s Civil Division, said in a statement, “American consumers deserve the right to make informed choices when deciding where to spend their hard-earned money.”

Adobe said it will notify affected customers after the court approves the agreement.

In separate legal action, Adobe still faces a class action lawsuit over similar subscription allegations, with plaintiffs seeking damages, restitution, disgorgement, injunctive relief, fees, costs and a jury trial.

What do you think about the Adobe subscriptions settlement? Let us know in the comments.

The government is represented by Francisco L. Unger, Zachary L. Cowan and Assistant Director Zachary A. Dietert, from the Enforcement Section of the Civil Division’s Enforcement and Affirmative Litigation Branch, with assistance from Assistant U.S. Attorney Savith S. Iyengar for the Northern District of California, in coordination with staff at the Federal Trade Commission’s Bureau of Consumer Protection.

The Adobe DOJ lawsuit is United States of America v. Adobe Inc., et al., Case No. 3:24-cv-05170, in the U.S. District Court for the Northern District of California.

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