Adobe has agreed to a $150 million settlement with US regulators to resolve allegations that the company misled customers about subscription cancellation fees. The agreement was announced Friday by the US Department of Justice, ending a lawsuit filed in June 2024 over Adobe’s billing and cancellation practices.
Under the proposed settlement, Adobe will pay $75 million in civil penalties and provide $75 million worth of free services to customers. The deal still requires approval from a federal court before it becomes final.
The government accused the company of hiding costly termination fees tied to its widely used annual paid monthly subscription plan. Regulators said some customers faced cancellation charges worth hundreds of dollars that were buried in fine print or behind hyperlinks during the sign up process.
Officials also claimed the company made cancellations unnecessarily complicated. According to the complaint, customers attempting to cancel online were forced to navigate several pages before completing the process. Phone cancellations could involve multiple representatives and delays that discouraged users from ending subscriptions.
The lawsuit cited the Restore Online Shoppers’ Confidence Act, a 2010 consumer protection law that requires companies to clearly disclose billing terms and obtain explicit consent for recurring payments. Regulators said Adobe’s practices violated these transparency requirements.
Adobe denied wrongdoing but said it has already made changes to its systems. In a statement, the company said it has simplified sign up and cancellation procedures in recent years to make them clearer for customers.
The case highlights increasing scrutiny of subscription based business models across the technology sector. Companies that rely on recurring revenue are facing pressure from regulators to make cancellation policies easier and more transparent.
Subscriptions remain central to Adobe’s financial strategy. The company reported that 97 percent of its $6.4 billion quarterly revenue came from subscription services such as Photoshop, Acrobat, and Creative Cloud.
The settlement comes at a pivotal moment for the company. Chief executive Shantanu Narayen recently announced plans to step down, and investors are closely watching how Adobe adapts to growing competition driven by artificial intelligence tools.
Regulators say the case sends a broader message that companies must present subscription terms clearly and allow consumers to cancel services without unnecessary obstacles.
