Adobe to Pay $150M, Offer $75M Free Services After DOJ Hidden Fees Settlement
Adobe will pay $150m to the U.S. Department of Justice—$75m as a civil penalty and $75m in free services—resolving claims of hidden early termination fees in its annual subscriptions. The deal mandates clear disclosure of termination fees and simplified cancellations, as subscriptions made up 97% of Adobe’s $6.4bn quarterly revenue.
1. Settlement Details
Adobe agreed to pay a $75m civil penalty and provide $75m in free services to resolve allegations it obscured early termination fees and complicated cancellations on its annual paid monthly subscription plan, subject to court approval.
2. Business Practice Changes
Under the proposed order, Adobe must clearly disclose early termination fees before enrollment, notify users before converting trials longer than seven days into paid plans, and streamline cancellation processes with fewer online steps or interactions.
3. Financial Context
Subscriptions accounted for 97% of Adobe’s $6.4bn revenue in the quarter ending Feb. 27, underscoring the significance of compliance and clarity for its core recurring revenue model.