Adobe faces big fines from FTC over difficult subscription cancellation

Adobe

On its quarterly financial call, Adobe told investors it has been cooperating with FTC staff since June 2022. The FTC believes Adobe may violate the Restore Online Shoppers' Confidence Act.

"We have been cooperating with and engaging in discussion with the FTC staff regarding our disclosure and subscription cancellation practices," Adobe said in a statement seen by The Wall Street Journal.

Adobe asserts that it believes its practices comply with the law.

Adobe has long been scrutinized for how it handles subscriptions — and even more for how it handles canceling them. Unless a potential subscriber reads the fine print, it's easy for them to get trapped in an expensive situation.

When a user subscribes to something Adobe offers, they're given three options to pay: monthly; annual, paid monthly; or annual, paid upfront. Here's what each of those options means.

Monthly subscription: The most expensive option, Adobe's monthly subscriptions are often twice the cost of the other subscription options. However, if a user needs to cancel the subscription, Adobe does not charge a fee.

Annual subscription, paid monthly: Typically half the price of the standard monthly subscription, Adobe allows users to subscribe at the yearly price while still paying monthly. The downside is that Adobe will charge 50% of the remaining contract if canceled.

Annual subscription, paid upfront: Users may also choose to pay upfront for a full year of service. While this has advantages, such as preventing surprise billing, Adobe warns users that there are absolutely no refunds on this plan after the first 14 days.

Regulators are cracking down on companies with unclear subscription practices. Notably, the FTC wants to make canceling subscriptions anywhere on the web easier, easing the burden on customers who may not wish to use a service anymore.

At present, there is no uniformity in subscription cancellation procedures. Consequently, customers may go through lengthy and complicated cancellation processes or call or visit the company in person to cancel a service. The FTC is working towards standardizing these procedures to make them more customer-friendly.