By Jonathan Stempel
March 13 (Reuters) - Adobe said on Friday it will pay $75 million to resolve a U.S. government lawsuit accusing the Photoshop and Acrobat maker of harming consumers by concealing hefty termination fees and making it difficult to cancel subscriptions.
The San Jose, California-based company said it will also provide $75 million of free services to customers, in addition to making the $75 million payment to the U.S. Department of Justice. Court approval is required.
In a June 2024 complaint,
the Justice Department and Federal Trade Commission accused Adobe of burying termination fees for its popular "annual paid monthly" subscription plan, sometimes reaching hundreds of dollars, in the fine print or behind text boxes and hyperlinks.
They also said Adobe made cancelling subscriptions a hassle, forcing subscribers who wanted to cancel online to wade through numerous pages, and subscribers who wanted to cancel by phone to repeat themselves to multiple representatives and encounter "resistance and delay."
Adobe was accused of violating the Restore Online Shoppers’ Confidence Act, a 2010 law barring merchants from imposing charges, including for automatic subscription renewals, without disclosing material terms clearly and obtaining customer consent.
In a statement on its website, Adobe said it has in recent years streamlined its sign-up and cancellation processes and made them more transparent.
"While we disagree with the government's claims and deny any wrongdoing, we are pleased to resolve this matter," Adobe said.
The Justice Department and the FTC did not immediately respond to requests for comment. Adobe did not immediately respond to requests for additional comment.
Subscriptions accounted for 97% of Adobe's $6.4 billion in revenue for the quarter ending February 27.
Adobe announced the settlement one day after Chief Executive Shantanu Narayen said he will step down after more than 18 years in the role.
The company's shares have fallen this year, reflecting investor concern about how artificial intelligence will affect Adobe's business prospects.
(Reporting by Jonathan Stempel in New York, Editing by Louise Heavens and Bill Berkrot)
