Adobe has agreed to a $150 million settlement to resolve a U.S. government lawsuit that accused the company of hiding costly termination fees and making it too hard for customers to cancel certain subscriptions.
The Department of Justice said the deal calls for Adobe to pay a $75 million civil penalty and provide another $75 million in free services to customers, pending court approval. The case centered on the company’s “annual paid monthly” plan, which regulators said did not clearly disclose cancellation charges that could run into the hundreds of dollars.
Federal authorities alleged that Adobe buried important pricing terms in fine print, hyperlinks and text boxes, and created a cumbersome cancellation process for online and phone users. The government said those practices violated a federal law that requires companies to clearly disclose material terms before charging consumers.
Adobe said it had already made its sign-up and cancellation processes more transparent in recent years. The company denied wrongdoing but said it was pleased to put the matter behind it.
The settlement lands at a sensitive moment for Adobe. Subscription revenue remains the backbone of its business, and the announcement came a day after the company said Chief Executive Shantanu Narayen would step down after more than 18 years in the role.