Adobe has agreed to pay US$75 million to settle a lawsuit brought by the U.S. Department of Justice accusing the software maker of concealing subscription termination fees and making it difficult for customers to cancel their plans.
The settlement, announced Friday, resolves a complaint filed in June 2024 by the Justice Department and the Federal Trade Commission (FTC). The government alleged that Adobe misled consumers about fees tied to its subscription services, including popular products such as Photoshop and Acrobat.
Under the agreement, Adobe will pay US$75 million to the Justice Department and provide an additional US$75 million in free services to customers. The settlement still requires approval by a U.S. court.
The government accused the San Jose, California-based company of hiding large termination charges associated with its “annual paid monthly” subscription plan.
According to the complaint, the fees — which could reach hundreds of dollars — were often buried in fine print or accessible only through hyperlinks and text boxes that many users might overlook.
Regulators also alleged that Adobe created a complicated process for customers seeking to cancel subscriptions.
Consumers who attempted to cancel online were required to navigate multiple web pages, while those who called customer service were sometimes forced to repeat requests to several representatives and faced delays before their accounts could be closed.
Authorities said these practices violated the Restore Online Shoppers’ Confidence Act, a 2010 U.S. law designed to protect consumers from hidden charges and automatic subscription renewals without clear disclosure.
The law requires companies to clearly present all material terms of online transactions and obtain explicit customer consent before imposing recurring charges.
In a statement, Adobe said it had already taken steps in recent years to simplify and improve its subscription processes.
The company said it had streamlined sign-up and cancellation procedures and made pricing and terms more transparent for customers.
“While we disagree with the government’s claims and deny any wrongdoing, we are pleased to resolve this matter,” Adobe said.
Officials from the Justice Department and the FTC did not immediately comment on the settlement.
Subscriptions form the core of Adobe’s business model.
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The company reported that subscription services accounted for 97 percent of its $6.4 billion in revenue for the quarter ending February 27.
Adobe has increasingly shifted from selling standalone software licenses to a subscription-based model over the past decade, offering products through its Creative Cloud and other digital service platforms.
The settlement comes at a sensitive time for the company.
Just a day earlier, longtime chief executive Shantanu Narayen announced plans to step down after more than 18 years leading the company once a successor is appointed.
Narayen, who became CEO in 2007, oversaw Adobe’s transition to cloud-based software subscriptions and its expansion into digital marketing and data analytics tools.
In recent months, Adobe’s shares have come under pressure as investors weigh the potential impact of artificial intelligence technologies on the company’s future growth.
Some analysts have raised concerns that rapidly advancing AI tools could challenge Adobe’s traditional design and creative software markets.
The settlement with U.S. regulators marks one of the latest cases in which authorities have targeted subscription practices by major technology companies.
Consumer advocates have increasingly pushed for stricter enforcement of laws requiring companies to make cancellation processes as simple as sign-up procedures.
Regulators say the measures are aimed at preventing so-called “dark patterns,” where companies design digital interfaces in ways that make it difficult for users to cancel services or avoid unwanted charges.
Despite the legal dispute, Adobe remains one of the world’s largest software companies, serving millions of individual users and businesses with creative, document management and marketing tools.
