Adobe reaches $150m settlement over alleged hidden subscription fees
The US Justice Department said on Friday that it filed a proposed stipulated order that, if approved by a court, would resolve a case against Adobe and two of its employees, with the company agreeing to a $150 million settlement and an injunction.
Under the proposal, Adobe would be required to pay $75 million in civil penalties and offer customers $75 million in free services.
This would resolve allegations that the company’s subscription practices violated the Restore Online Shoppers’ Confidence Act (ROSCA).
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ROSCA requires companies offering online subscriptions to clearly disclose important subscription information and provide a simple way for customers to cancel.
In the complaint filed in the US District Court for the Northern District of California, the government alleged that Adobe used “fine print and inconspicuous hyperlinks” to hide important information about its subscription plans, such as a hefty Early Termination Fee that could be applied to subscribers when they cancel their subscriptions.
Additionally, the government said that Adobe complicated the cancellation process, subjecting subscribers “to convoluted and inefficient cancellation processes filled with unnecessary steps, delays, unsolicited offers, and warnings.”
“American consumers deserve the right to make informed choices when deciding where to spend their hard-earned money,” said Assistant Attorney General Brett A. Shumate, head of the Justice Department’s Civil Division. “The Justice Department will strongly oppose any attempt to harm Americans with deceptive and unfair business practices.”
In addition to the penalties and free services, Adobe will be required to clearly disclose any Early Termination Fee and explain how it is calculated before customers subscribe.
Adobe will also have to remind subscribers during any free trial lasting longer than seven days if an Early Termination Fee applies before converting them into paying customers.
Additionally, Adobe will have to provide customers with an easy way to cancel their subscriptions.
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