Adobe’s nightmare just got worse, and it involves a jaw-dropping payout for years of anti-consumer practices

Adobe is set to pay a hefty $75 million to the U.S. government, alongside providing another $75 million in free services to customers, all to settle a lawsuit accusing the company of harming consumers with hidden termination fees and ridiculously difficult cancellation processes, as reported by Reuters. This news just dropped, and it’s a pretty significant hit for the company behind Photoshop and Acrobat.

This whole situation stems from a complaint filed in June 2024 by the Justice Department and the Federal Trade Commission. They basically said Adobe was being super sneaky about the termination fees for its popular “annual paid monthly” subscription plan. We’re talking fees that could run into hundreds of dollars, often tucked away in tiny text or hidden behind confusing links and text boxes.

The lawsuit also claimed that cancelling a subscription with Adobe was an absolute nightmare. If you tried to cancel online, you had to wade through what felt like an endless maze of pages. And if you decided to brave the phone, you were apparently forced to repeat your story to multiple representatives, hitting all sorts of resistance and delays.

This is one case where the Federal Trade Commission really did what it was made for

The government accused Adobe of violating the Restore Online Shoppers’ Confidence Act, a law from 2010 that pretty clearly states merchants can’t just slap charges on customers, including for automatic renewals, without being super clear about the terms and getting consent. It’s a law designed to protect us, the consumers, from these kinds of tricks. We recently saw Google Play users in the US getting official settlement emails about an antitrust case against Google in a similar vein.

Adobe, for its part, put out a statement on its website saying it has actually streamlined its sign-up and cancellation processes in recent years, making them more transparent. They even said, “While we disagree with the government’s claims and deny any wrongdoing, we are pleased to resolve this matter.” So, they’re settling, but they’re not admitting guilt.

This all comes at a pretty interesting time for Adobe. Just one day before this settlement was announced, CEO Shantanu Narayen revealed he’s stepping down after more than 18 years at the helm. Plus, the company’s shares have been taking a bit of a hit this year, mainly because investors are a little worried about how artificial intelligence might affect Adobe’s future business prospects.

It’s also worth remembering just how important subscriptions are to Adobe’s bottom line. They accounted for a whopping 97% of the company’s $6.4 billion in revenue for the quarter ending February 27. When your entire business model relies so heavily on subscriptions, making it hard for people to leave is certainly one way to keep those numbers up, but it clearly comes with legal consequences.

Hopefully, this settlement means we’ll see even clearer, easier cancellation processes in the future from Adobe and other subscription-based services.