United States Takes Legal Action Against Adobe For Unlawful Subscription Practices
In a significant legal move, the United States Department of Justice (DOJ) has filed a lawsuit against Adobe in the United States District Court, Northern District of California. The lawsuit accuses the software giant of obscuring fees and making it unlawfully difficult for users to cancel their software subscriptions.
Filed on June 17, 2024, following a notification and referral from the Federal Trade Commission (FTC), the lawsuit alleges that Adobe has been enrolling consumers in its default, most lucrative subscription plans without clearly disclosing essential terms. The primary complaint centers on Adobe’s "Annual, Paid Monthly" subscription plan, which, according to the DOJ, commits users to a yearlong contract with a hefty early termination fee only revealed during cancellation attempts.
“For years, Adobe has harmed consumers by enrolling them in its default, most lucrative subscription plan without clearly disclosing important plan terms,” the lawsuit states. “Adobe fails to adequately disclose to consumers that by signing up for the ‘Annual, Paid Monthly’ subscription plan, they are agreeing to a yearlong commitment and a hefty early termination fee that can amount to hundreds of dollars. Adobe clearly discloses the early termination fee only when subscribers attempt to cancel, turning the stealth early termination fee into a powerful retention tool that traps consumers in subscriptions they no longer want.”
Despite significant redactions in the publicly available lawsuit, it is evident that the United States aims to end Adobe’s alleged "unlawful conduct" and seeks injunctive relief, civil penalties, monetary relief, and additional compensatory measures.
Key Defendants and Allegations
The lawsuit names the United States of America as the plaintiff, with Adobe as the primary defendant. Additional defendants include Maninder Sawhney, Adobe’s Senior Vice President of Digital Go-To-Market and Sales, and David Wadhwani, Adobe’s President of Digital Media Business. The complaint asserts that both Sawhney and Wadhwani have acted in ways relevant to the allegations, either alone or in collaboration with others.
“The Federal Trade Commission is taking action against software maker Adobe and two of its executives, Maninder Sawhney and David Wadhwani, for deceiving consumers by hiding the early termination fee for its most popular subscription plan and making it difficult for consumers to cancel their subscriptions,” the FTC’s statement reads.
FTC’s Stance and Consumer Protection
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, emphasizes the FTC's commitment to consumer rights: “Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles. Americans are tired of companies hiding the ball during subscription signup and then putting up roadblocks when they try to cancel. The FTC will continue working to protect Americans from these illegal business practices.”
The FTC's investigation, based on consumer complaints, revealed that Adobe inadequately explained its pricing model and early termination fees. Users reported significant difficulties when attempting to cancel their subscriptions, with Adobe allegedly leveraging early termination fees to pressure customers into maintaining unwanted subscriptions. The DOJ’s lawsuit aligns with these findings, asserting that Adobe’s cancellation process is excessively difficult, violating consumer protection laws.
Violations and Legal Framework
The complaint charges Adobe with violating the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits unfair and deceptive online sales practices. Approved by Congress in December 2010, ROSCA (15 U.S.C. §§ 8401-8405) aims to protect consumers in online transactions. The FTC's unanimous vote (3-0) to refer the civil penalty complaint to the DOJ underscores the gravity of the allegations.
Seeking Justice and Relief
The United States has requested a jury trial, seeking convictions, monetary civil penalties, permanent injunctions to prevent further ROSCA violations, and additional relief for affected consumers. This lawsuit highlights the ongoing battle against deceptive business practices and underscores the government’s commitment to safeguarding consumer rights.
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Vertical Bar Media
For more information on consumer protection laws and how to safeguard your digital transactions, visit Vertical Bar Media.
Source: PetaPixel
Photo Credit: Depositphotos
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