Adobe Inc. (ADBE) and two company executives have been sued by the Justice Department and the Federal Trade Commission (FTC). The design and productivity software applications company offers online subscriptions through its website. The US departments allege that Adobe violated the Restore Online Shoppers’ Confidence Act (ROSCA) as it had a hidden “Early Termination Fee” and also had a complex cancelation process to stop web fans from canceling its subscription services,
The lawsuit was filed in the U.S. District Court in the Northern District of California on Monday. Adobe, which is well known for Photoshop, Acrobat, Illustrator, and other software, and the president of its digital media, David Wadhwani, and Maninder Sawhney, a vice president in the software company, have been named in the lawsuit.
The lawsuit detailed allegations such as locking customers in yearly subscriptions billed in monthly increments. According to the filing, the company also displayed early cancelation fees in lighter text and made the option to cancel difficult to find on its website.
The lawsuit also noted that subscription revenues had increased substantially. The software company earned $7.71 billion in subscription-based revenue in 2019. However, the revenue increased to $14.22 billion by 2023, for a total annual income of $19.41 billion.
Principal Deputy Assistant Attorney General Brian Boyton, the head of the DOJ’s Civil Division, said that the Justice Department would stop companies and their executives from “preying on consumers” through hidden terms, complex cancelation procedures, etc.
Dana Rao, Adobe’s general counsel and chief trust officer, described its subscription services as “convenient, flexible, and cost-effective” and noted that it was “transparent with the terms and conditions” and that the company’s cancelation process was “simple.”
The lawsuit filed by US regulators against San Jose-based Adobe seeks civil penalties and an injunction against further wrongdoing.
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