Adobe Inc has agreed to pay US$150 million (A$215 million) to settle a United States Government lawsuit alleging it hid large termination fees and made it hard to cancel subscriptions.
The U.S. Department of Justice said it had filed a proposed stipulated order to resolve a case against the software company and employees Maninder Sawhney and David Wadhwani.
The order required Adobe to pay $75 million in civil penalties and offer customers $75 million in free services to resolve allegations that its subscription practices violated the Restore Online Shoppers’ Confidence Act (ROSCA).
“American consumers deserve the right to make informed choices when deciding where to spend their hard-earned money,” Assistant Attorney General and Head of the Justice Department’s Civil Division Brett Shumate said in a statement.
“The Justice Department will strongly oppose any attempt to harm Americans with deceptive and unfair business practices.”
The Government alleged Adobe violated ROSCA by using fine print and inconspicuous hyperlinks to hide important information about subscription plans, including information about a hefty early termination fee for cancelling their subscriptions.
It also alleged Adobe thwarted subscribers’ attempts to cancel, subjecting them to convoluted and inefficient cancellation processes filled with unnecessary steps, delays, unsolicited offers and warnings.
ROSCA requires companies offering online subscriptions to clearly disclose important subscription information and to provide subscribers with simple ways to cancel.
“While we disagree with the government’s claims and deny any wrongdoing, we are pleased to resolve this matter,” Adobe said in a statement.
The company had to provide $75 million worth of services for free to customers who qualified, and it would contact them once the appropriate filings with the Court were made and accepted.
Subscriptions accounted for 97% of Adobe's $6.4 billion in revenue for the quarter ending 27 February.
Adobe shares (NASDAQ: ADBE) closed $20.46 (7.58%) lower at $249.32 on Friday (Saturday AEDT), valuing the company at $101.63 billion.
The company's shares have dropped 25% this year because of worries about how artificial intelligence will affect its business.
