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Adobe (ADBE) He became the latest target of the US government’s crackdown on companies accused of cheating customers out of their money through illegal business practices.
The Federal Trade Commission just filed lawsuit v. Adobe after it allegedly “harmed consumers for years by enrolling them in the most profitable default subscription plan without clearly disclosing important plan terms,” making it difficult for them to cancel because the company drained their pockets.
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Adobe’s $54.99 per month “annual and monthly” subscription plan gives users access to the company’s software applications, such as Photoshop, Acrobat, and Illustrator, which are often very popular among students and businesses.
The lawsuit, which was filed on June 17, claims that Adobe “failed to adequately disclose” to its customers that when they sign up for an “annual and paid monthly” subscription plan, they are committing to a year and may pay an early termination fee. It cost them hundreds of dollars, ultimately “trapping” them into keeping their subscriptions.
“During enrollment, Adobe hides the material terms of the APM (Annual Paid Monthly Subscription) plan in fine print and behind text boxes and optional hyperlinks, providing disclosures designed to go unnoticed and never seen by most consumers,” the lawsuit said. “Adobe then prevents cancellations by using a cumbersome and convoluted cancellation process. As part of this convoluted process, Adobe ambushes subscribers who have the ETF (early termination fee) previously withheld when they attempt to cancel. Through these practices, Adobe violated federal laws Designed to protect consumers.
The FTC claims it received numerous complaints from consumers about Adobe’s controversial practices, with many saying they were confused about what they were signing up for and were surprised by the early termination fees.
Through the lawsuit, the FTC is seeking “injunctive relief, civil penalties, and equitable monetary relief, as well as other remedies.”
TheStreet reached out to Adobe for comment but did not immediately receive a response.
Adobe’s stock price appears to have not been negatively affected by the FTC lawsuit. At last check on Tuesday afternoon, the stock was priced at about $525 per share, up from the $518 it was selling for at its previous close.
The company has been performing well financially as revealed by its second quarter earnings a report For 2024, it generated revenue of $5.3 billion during the quarter, which represents a 10% increase from what it reported during the same period last year.
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Adobe recently faced criticism from customers over a major change
The lawsuit comes after Adobe faced backlash from its customers last week after it began forcing them to accept the terms of an updated service agreement for Photoshop that states the company will have the right to access users’ work within the software so it can use it to train artificial intelligence. Among other reasons.
If customers did not accept the agreement, they would be banned from using Photoshop, which angered a large number of customers.
So am I reading this, right? @adobe @Photo shop
Can I use Photoshop unless I agree to have full access to anything I create with it, including NDA work? pic.twitter.com/ZYbnFCMlkE
– Sam Santala (@SamSantala) June 5, 2024
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