The UK Competition and Markets Authority (CMA) has launched an investigation into Adobe, concerning the US software giant’s early cancellation fees.

The investigation will centre on Adobe’s “annual contract, billed monthly” plan, where customers who cancel more than 14 days after signing up are required to pay 50% of the remaining yearly cost.

The regulator will assess whether these terms violate consumer protection laws and if customers are provided with clear and timely information about these fees before purchasing.

In its terms for Creative Cloud, Document Cloud and Acrobat, Adobe states: “You can cancel your subscription any time via your Adobe Account or by contacting Customer Support. If you cancel within 14 days of your initial order, you’ll be fully refunded. Should you cancel after 14 days, you’ll be charged a lump sum amount of 50% of your remaining contract obligation and your service will continue until the end of that month’s billing period.”

Emma Cochrane, the CMA’s executive director for consumer protection, commented on the importance of transparency and fairness in the digital design tools market, which is valued at nearly £60 billion in the UK.

“From students to content creators, millions of people rely on digital design tools – and they should feel confident that businesses selling these services play by the rules,” she said in a statement.

“Our investigation will consider whether Adobe customers are getting a fair deal and if they have enough information upfront about the cancellation fee.”

Since 2025, the CMA has had direct consumer enforcement powers, which allow it impose fines of up to 10% of a company’s global turnover in cases where consumer law has been broken.

The Adobe investigation is the ninth time these powers have been used, and this week the regulator imposed a £473,000 penalty on Euro Car Parks after the company failed to respond to an information notice, the first fine under the new arrangement.

The CMA’s announcement of its investigation into Adobe comes days after the company settled a $150 million lawsuit by the US Department of Justice, which accused the Adobe of unfair practices over its subscription and cancellation terms. After that case had been settled, Adobe stated that in recent years it has made its “sign-up and cancellation processes even more streamlined and transparent”.

Adobe has agreed to a $150m settlement with the US Department of Justice to resolve allegations that it did not clearly disclose termination fees and complicated the cancellation process for its subscription services.

The agreement requires Adobe to pay a $75m civil penalty and provide another $75m in free services to customers, pending court approval.

The Justice Department and Federal Trade Commission filed a complaint in June 2024, asserting that Adobe obscured information about early termination fees on its “annual paid monthly” subscription plan, reported Reuters.

These fees could reach hundreds of dollars and were often hidden in fine print or placed behind hyperlinks and text boxes.

Authorities also claimed that Adobe made it difficult for customers to cancel subscriptions, requiring multiple steps online or repeated interactions with customer service representatives when cancelling by phone.

The complaint stated that these practices violated the Restore Online Shoppers’ Confidence Act, which mandates that companies offering online subscriptions must clearly disclose key terms and provide straightforward cancellation options before charging customers.

US Department of Justice Civil Division head Assistant Attorney General Brett Shumate said: “American consumers deserve the right to make informed choices when deciding where to spend their hard-earned money. The Justice Department will strongly oppose any attempt to harm Americans with deceptive and unfair business practices.”

The settlement also addresses claims against two Adobe executives named in the government’s action.

As part of the proposed order, Adobe will need to inform customers about early termination fees and how they are calculated before enrolment.

For free trials longer than seven days, the company must notify users before switching them to a paid plan with a termination fee.

Adobe is also required to offer easier methods for cancelling subscriptions.

In response, Adobe stated on its website that it has recently taken steps to simplify its sign-up and cancellation processes.

The company denied any wrongdoing but welcomed an end to the proceedings. Subscriptions represented 97% of Adobe’s $6.4bn revenue for the quarter ending 27 February.