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Adobe Reaches $150 Million Settlement in US Case on Subscription Cancellation Practices

Adobe has agreed to a $150 million settlement to resolve a lawsuit filed by U.S. regulators accusing the software company of making it difficult for customers to cancel subscriptions and failing to clearly disclose termination fees.

The case, brought by the U.S. Department of Justice and the Federal Trade Commission in 2024, alleged that Adobe’s subscription practices misled consumers, particularly those enrolled in its “annual paid monthly” plans for products such as Photoshop and Acrobat. Regulators claimed customers were often unaware of significant termination fees when they signed up for the service.

Under the proposed settlement, Adobe will pay a $75 million civil penalty and provide an additional $75 million worth of free services to affected customers. The agreement still requires approval from a federal court.

Allegations of Hidden Fees and Difficult Cancellations

According to regulators, Adobe failed to clearly disclose early termination charges that could reach hundreds of dollars for customers attempting to cancel before the end of their annual subscription period. Authorities said the fees were often hidden in detailed terms and conditions or presented in ways that were not immediately visible to users.

The complaint also alleged that cancelling subscriptions was unnecessarily complicated. Customers attempting to cancel online were reportedly required to navigate several pages before completing the process. In other cases, users who contacted customer service by phone had to interact with multiple representatives and faced delays or resistance when trying to terminate their plans.

Regulators argued that these practices violated the Restore Online Shoppers’ Confidence Act, a U.S. law designed to ensure businesses clearly disclose subscription terms and obtain informed customer consent before charging recurring fees.

Company Response and Industry Context

Adobe said it disagrees with the government’s allegations and denies wrongdoing but chose to settle the case to move forward. The company said it has already taken steps to simplify and improve the transparency of its subscription sign-up and cancellation procedures in recent years.

Subscription services are a central part of Adobe’s business model, accounting for the vast majority of the company’s revenue. The company reported that subscriptions contributed nearly all of its $6.4 billion quarterly revenue in its most recent earnings report.

The settlement comes at a time of broader transition for the company. Longtime chief executive Shantanu Narayen recently announced plans to step down after leading Adobe for more than 18 years. Meanwhile, investors have been closely watching how the rapid rise of artificial intelligence could reshape the company’s creative software business.