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Adobe Charged by Federal Officials With Deceiving Customers

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Key Takeaways

  • Adobe has been charged in federal court with deceiving customers with hidden fees and making it difficult for them to cancel their subscriptions.
  • The lawsuit alleges the company and two executives steered consumers to an annual paid monthly plan that was hard to get out of.
  • Officials are seeking monetary damages and other relief.

Shares of Adobe (ADBE) fell in intraday trading Monday as the federal government accused the software company and two of its executives of deceiving consumers about fees and making it tough for them to get out of their subscriptions.

The District Attorney for the Northern District of California filed the lawsuit in San Jose on the recommendation of the Federal Trade Commission (FTC). It alleges that the maker of Photoshop and Acrobat hid the early termination fee for its most popular subscription plan and made it difficult for consumers to cancel their subscriptions.

The complaint argued that Adobe “pushed consumers toward the ‘annual paid monthly’ subscription without adequately disclosing that cancelling the plan in the first year could cost hundreds of dollars.”

FTC Says Adobe ‘Trapped Customers Into Year-Long Subscriptions’

Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said the early termination fees and cancellation hurdles “trapped customers into year-long subscriptions.”

Along with the company, the lawsuit names Maninder Sawhney, Adobe’s Senior Vice President of Digital Go To Market & Sales, and David Wadhwani, President of Digital Media Business.

Prosecutors asked the court for “injunctive relief, civil penalties, equitable monetary relief, as well as other relief.”

Adobe did not respond to an Investopedia request for comment.

Adobe shares, which were down 1.2% to $518.84 as of 1:47 p.m. ET Monday, have lost about 13% of their value this year.

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