Adobe settles DOJ cancellation fee lawsuit, will pay $75 million penalty

Adobe has agreed to a $75 million settlement with the U.S. Department of Justice to resolve allegations that it used deceptive practices to lock customers into Creative Cloud subscriptions. The DOJ's 2024 lawsuit claimed Adobe violated the Restore Online Shoppers' Confidence Act by hiding substantial early termination fees—charging customers 50% of their remaining subscription balance—within fine print or behind hyperlinks during sign-up. Furthermore, the government alleged Adobe employed intentionally complicated phone trees to frustrate cancellation attempts. While Adobe maintains it disagrees with the claims and admits no wrongdoing, it has agreed to the financial penalty to avoid a protracted court battle.

In addition to the $75 million paid to the government, Adobe must provide an equivalent $75 million in free services to customers who were charged these cancellation fees. The company states it has already implemented changes to make fee disclosures clearer at the point of sale in recent years. This settlement primarily addresses past conduct and is unlikely to drastically alter Adobe's core subscription-based business model, which has been highly profitable, generating over $7 billion in net profit last year. For Adobe, writing a $75 million check represents a strategic cost to resolve a potentially messy legal dispute and move forward.