Adobe Executive Likened Early Termination Fees to Heroin, Unredacted Documents Reveal

An Adobe executive allegedly compared early termination fees to heroin for the software company, as per newly unredacted documents in the US government's lawsuit against the Photoshop and Creative Cloud maker.

Allegations by Justice Department and Federal Trade Commission

The Justice Department and the Federal Trade Commission highlighted in the unredacted lawsuit against Adobe that a company executive acknowledged the "hidden" early termination fee as "a bit like heroin for Adobe" and stated that there is no way to eliminate ETF or discuss it more openly without facing significant business repercussions.

US Regulators Sue Adobe

Last month, US regulators filed a lawsuit against Adobe, alleging that the company breached federal consumer protection laws by concealing costly early termination fees and creating obstacles for users attempting to cancel their subscriptions.

Failure to Disclose Important Plan Terms

The lawsuit accuses Adobe of enrolling consumers in its default, most profitable subscription plan without transparently disclosing crucial plan terms. It also names two Adobe executives — Maninder Sawhney and David Wadhwani — as defendants.

Undisclosed Commitment and Fees

Consumers signing up for Adobe's "Annual, Paid Monthly" subscription plan are reportedly not adequately informed that they are committing to a year-long subscription with a substantial early termination fee that can reach hundreds of dollars.

Impact on Consumers and Revenue

The unredacted lawsuit claims that Adobe is aware of the harmful effects of inadequate plan disclosures on consumers but continues these practices to maintain subscription revenues. The company's general counsel and chief trust officer, Dana Rao, defended Adobe's business decisions and stated that early termination fees have minimal impact on revenue.

In response to the lawsuit, Rao emphasized that the complaint distorts the company's operations and that Adobe will challenge the FTC's allegations in court. He stressed that the early termination fees play a minor role in Adobe's revenue, accounting for less than half a percent globally, while offering customers flexibility in choosing plans that balance cost and commitment.

This article is based on the original report by Business Insider.

—————————————————————————————————————————————
By: nmusumeci@businessinsider.com (Natalie Musumeci)
Title: Adobe Executive Likened Early Termination Fees to Heroin, Unredacted Documents Reveal
Sourced From: www.businessinsider.com/adobe-lawsuit-justice-department-early-termination-fees-2024-7
Published Date: Thu, 25 Jul 2024 20:27:27 +0000