Justice Department fines Adobe $75 million and forces free services to protect U.S. consumers from deceptive subscriptions

The U.S. Justice Department has announced a major enforcement action against Adobe Inc. and two of its executives, Maninder Sawhney and David Wadhwani.

The department has filed a proposed stipulated order that, if approved by the court, will resolve allegations that Adobe’s subscription practices violated the Restore Online Shoppers’ Confidence Act (ROSCA).

Under the terms of the proposal, Adobe would pay $75 million in civil penalties and provide an additional $75 million in free services to affected customers.

The case stems from complaints that Adobe obscured important subscription details, including fees and cancellation policies, making it harder for consumers to make informed decisions.

What the Allegations Say

ROSCA requires companies offering online subscriptions to clearly disclose critical information, such as recurring fees and cancellation methods.

The Justice Department alleged that Adobe violated this law by hiding details in fine print and inconspicuous hyperlinks.

Customers were reportedly confronted with confusing cancellation procedures, unnecessary steps, delays, and unsolicited offers when trying to terminate subscriptions.

Particularly concerning was the Early Termination Fee, which customers may incur when canceling a subscription.

The complaint suggested that Adobe made it difficult for users to fully understand or avoid this fee before committing to a plan.

Justice Department Statement

“American consumers deserve the right to make informed choices when deciding where to spend their hard-earned money,” said Brett A. Shumate, head of the Civil Division.

“The Justice Department will strongly oppose any attempt to harm Americans with deceptive and unfair business practices.”

The stipulated order is designed not just to penalize Adobe but also to protect future consumers.

It will ensure that any Early Termination Fee is clearly disclosed, including how it is calculated, and that customers are reminded before free trials longer than seven days automatically convert to paid plans with fees.

Easy cancellation options will also be required for all subscribers.

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Legal Team and Oversight

The United States is represented by Trial Attorneys Francisco L. Unger and Zachary L. Cowan Director Zachary A. Dietert.

The case was supported by Savith S. Iyengar from the Northern District of California and coordinated with the Federal Trade Commission.

The action highlights the government’s commitment to ensuring transparency and fairness in online subscriptions, a sector that affects millions of Americans daily.

Impact and Consequences

If approved, the order will not only deliver a $150 million combined financial impact (penalties and free services) but also set stricter standards for subscription transparency across the tech industry.

Companies offering online subscriptions may face closer scrutiny, particularly regarding hidden fees, complicated cancellation processes, and misleading trial-to-paid conversions.

For Adobe, this represents a significant reputational and operational challenge.

The company must overhaul its subscription disclosures, implement new compliance measures, and maintain ongoing monitoring to prevent future violations.

What’s Next?

The proposed stipulated order must be approved by the U.S. District Court for the Northern District of California.

If the court enters the order, Adobe will begin rolling out the required changes immediately, including clearer subscription disclosures and simplified cancellation methods.

The action may also inspire similar enforcement against other tech companies with confusing subscription models.

Consumer advocacy groups are likely to monitor compliance closely and could push for additional regulatory guidance.

Summary

The Justice Department is taking a firm stance against Adobe for allegedly deceptive subscription practices under ROSCA.

The proposed order calls for $75 million in penalties and $75 million in free services while enforcing stricter consumer protections.

The case emphasizes the need for transparency in online subscriptions and signals increased government scrutiny of tech companies’ billing practices.

Bulleted Takeaways

• Justice Department targets Adobe Inc. and executives Maninder Sawhney and David Wadhwani for ROSCA violations.

• Proposed order requires $75 million in civil penalties plus $75 million in free services to consumers.

• Allegations include hiding subscription details, obstructing cancellations, and failing to disclose Early Termination Fees.

• Adobe must now clearly disclose fees, remind customers of trial conversions, and provide easy cancellation options.

• The enforcement team includes U.S. Justice Department attorneys and coordination with the Federal Trade Commission.

• Case sets a precedent for stricter oversight of subscription-based services across the tech industry.