Adobe agrees to $150m settlement over hidden fees, cancellation hurdles

Adobe has agreed to a $150 million settlement to resolve a US government lawsuit alleging it concealed hefty subscription termination fees and made cancellations difficult, the Department of Justice said.

The accord includes a $75 million civil penalty and $75 million in free services for customers, and requires court approval.

Filed in June 2024 by the DoJ and FTC, the complaint accused Adobe of burying early-termination fees for its “annual paid monthly” plan—sometimes hundreds of dollars—and steering customers through cumbersome online and phone cancellation processes.

Prosecutors said the practices violated the Restore Online Shoppers’ Confidence Act, which requires clear disclosure of material terms and affirmative consumer consent for recurring charges. The settlement also resolves claims against two Adobe executives.

Adobe said it has streamlined and made its sign-up and cancellation flows more transparent, while denying wrongdoing. Subscriptions accounted for 97 per cent of Adobe’s $6.4 billion revenue in the quarter ended February 27.

The settlement was announced a day after CEO Shantanu Narayen said he would step down after more than 18 years, amid investor concerns over how AI could affect Adobe’s outlook.