By Chris Wack


The Federal Trade Commission said Monday that it will be taking action against software maker Adobe and two of its executives, Maninder Sawhney and David Wadhwani, for allegedly deceiving consumers.

Adobe said it would refute the FTC's claims in court.

"Our priority is to always ensure our customers have a positive experience," Dana Rao, general counsel and chief trust officer, said on the company's website. "We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process."

The FTC said the company and its executives hid an early termination fee for its most popular subscription plan and made it difficult for consumers to cancel their subscriptions.

Wadhwani is the president of Adobe's digital media business, and Sawhney is an Adobe vice president.

A federal court complaint filed by the Department of Justice upon referral from the FTC charges that Adobe pushed consumers toward the annual paid monthly subscription without adequately disclosing that canceling the plan in the first year could cost hundreds of dollars.

"Adobe trapped customers into year-long subscriptions through hidden early termination fees and numerous cancellation hurdles," said Samuel Levine, director of the FTC's Bureau of Consumer Protection.

According to the complaint, Adobe's website preselects the annual paid monthly option for consumers who purchase a subscription through the website. The FTC said Adobe prominently displays the plan's monthly cost during enrollment, but it buries the early termination fee and its amount, which is 50% of the remaining monthly payments when a consumer cancels in the first year.

A look at Adobe's website shows "annual plan, paid monthly" is the first of two subscription options, the other being "annual plan, prepaid." Below those options is a note that says "Fee applies if you cancel after 14 days" with an information button. The information button states "If you cancel after 14 days, your service will continue until the end of that month's billing period, and you will be charged an early termination fee." It doesn't state what the fee would be.

Consumers complained to the FTC and the Better Business Bureau about the early termination fees, according to the complaint.


Write to Chris Wack at chris.wack@wsj.com


(END) Dow Jones Newswires

06-17-24 1407ET