Adobe executive called software cancellation fees “heroin” for the company, FTC says

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Adobe executive called software cancellation fees “heroin” for the company, FTC says

Last month, US regulators sued Adobe - accusing the company of violating federal laws designed to protect consumers.

Published on 29th July 2024

Adobe’s controversial billing practices and punitive fees for early subscription termination have been likened to “heroin” for the company by an executive, an unredacted FTC filing has claimed.

The FTC’s lawsuit alleges Adobe’s inadequate disclosures about its annual plans, which are paid monthly, harm and mislead consumers, who are often unaware of the significant early termination fees.

The Federal Trade Commission also suggests that fewer consumers would subscribe to Adobe’s suite of creativity apps if it were more transparent about its subscription fees.

Adobe slated for its early termination fees…again

The complaint reveals an Adobe executive admitted the hidden fees are essential to the company’s revenue model, despite their potential to mislead customers.

“As one [unnamed] Adobe executive admitted, the hidden [early termination fee] is ‘a bit like heroin for Adobe’ and ‘there is absolutely no way to kill off [early termination fee] or talk about it more obviously [without] taking a big business hit’,” the document states.

In response, Adobe disputes the FTC’s allegations, arguing the agency cherry-picks material to support its case. The executive who made the “heroin” comparison is not part of Adobe’s leadership team, according a company representative.

General Counsel and Chief Trust Officer Dana Rao emphasized the minor financial impact of early termination fees on Adobe’s revenue, representing less than 0.5% globally.

Although the software company may list details of the early termination fee on its site, the FTC’s lawsuit alleges that the information is not clearly available during the signup process.

Adobe reportedly plans to challenge the FTC’s claims in court.