Did Adobe make annual subscriptions look like monthly commitments?

On June 17, 2024, the United States filed a complaint against Adobe and executives Maninder Sawhney and David Wadhwani in the Northern District of California. The government alleged that Adobe emphasized monthly prices while obscuring the annual commitment and cancellation fee before customers supplied credit card details. It also alleged that Adobe obstructed customers who tried to cancel.

The record is more precise than a claim that Adobe simply concealed a contract. The checkout examples included an annual-plan label. The dispute concerns whether Adobe adequately disclosed the financial consequences of that label. The complaint supplies allegations and checkout illustrations, not a judicial finding that Adobe violated the law.

What did the customer agree to buy?

The complaint distinguishes Adobe's annual-paid-monthly plan from a genuinely monthly subscription. Under the annual plan, the customer buys a year of service and pays in installments. The billing interval is monthly. The commitment is not.

That distinction becomes expensive at cancellation. The complaint describes an early termination fee equal to 50% of the remaining contractual obligation when a customer cancels after the initial 14-day refund period. Stopping service does not simply stop the next monthly payment.

Adobe's subscription terms separately describe monthly, annual-paid-monthly, and annual-prepaid arrangements. Its Creative Cloud subscription guidance also distinguishes an annual contract billed monthly from a monthly plan without an annual commitment. These are different products, not interchangeable ways of describing the same purchase.

The government's case therefore does not depend on proving that annual subscriptions are inherently improper. It depends on what Adobe told customers about the product they selected, and when Adobe told them. An installment amount answers how much leaves the account each month. It does not answer how much the customer has committed to pay.

Where was the expensive part?

According to the complaint, Adobe preselected the annual-paid-monthly option during enrollment. The enrollment examples displayed the recurring monthly price prominently. The government alleged that Adobe gave the early termination fee much less prominence, placing its explanation behind hyperlinks or information icons.

The annual label matters. It is evidence against the broadest possible accusation that Adobe represented every plan as commitment-free. A reader should not have to ignore that label for the government's argument to work.

But the label does not disclose the cancellation formula. A customer can understand that a subscription lasts a year without understanding that leaving early triggers a charge for half the remaining obligation. Those are related facts, not identical ones.

The complaint's strongest evidence is the arrangement of those facts. The monthly price appeared in the purchase path. The government alleged that the fee's size and operation required additional investigation, and that customers often encountered the financial consequence only when attempting to leave.

Adobe's defense cannot be tested merely by asking whether the fee appeared somewhere in its documents. The relevant comparison is between the information presented to secure enrollment and the information needed to understand the obligation being purchased.

What did federal law require?

The government's central statutory claim rests on the Restore Online Shoppers' Confidence Act, or ROSCA. Section 8403 of Title 15 addresses online charges made through a negative-option feature, where a customer's silence or failure to cancel permits continued charging.

The provision requires clear and conspicuous disclosure of all material transaction terms before the business obtains billing information. It separately requires express informed consent before charging and simple mechanisms for stopping recurring charges.

Those requirements explain why the sequence matters. A cancellation fee disclosed during cancellation comes after the purchase decision. A fee accessible before enrollment still raises a different question: was access through a link or icon a clear and conspicuous disclosure in that particular presentation?

The Federal Trade Commission Act, at 15 U.S.C. § 45, supplies the underlying prohibition on unfair or deceptive acts or practices. ROSCA's enforcement provision, § 8404, connects violations to the FTC's enforcement framework. The complaint sought civil penalties and injunctive relief through federal court.

This was not an allegation that Adobe failed to obey a subsequently announced cancellation rule. The June 2024 complaint invoked existing requirements governing disclosure, consent, and the ability to stop recurring charges.

Could customers actually leave?

The complaint treats cancellation as a separate problem from the fee. Even a fully disclosed annual commitment would not answer whether Adobe provided a simple mechanism for stopping recurring charges.

For online cancellation, the government described a process involving multiple pages, retention offers, and additional steps before completion. For cancellation through customer service, it alleged transfers, delays, and interrupted contacts. It also described customers who believed they had canceled but continued to receive charges.

The number of pages alone is not the whole case. A confirmation page can establish that a customer really wants to end a subscription. The allegation becomes stronger where the process frustrates that decision or leaves the customer mistaken about whether it took effect.

Adobe's published cancellation help instructs customers to select their plan, begin cancellation, review the details, and complete the confirmation process. It also tells customers to check for confirmation. Its separate plan-change guidance explains that switching plans changes billing arrangements and begins the new plan immediately.

These are live support documents, not preserved copies of the June 2024 checkout and cancellation screens. They establish Adobe's published procedures, but the historical case must rest on the complaint's documented flows. Changing a plan and ending a subscription are different transactions.

What does Adobe say?

In its response to the June 2024 action, Adobe defended the transparency of its subscription terms and the simplicity of cancellation. It said it would contest the government's claims. That response squarely disputes both halves of the complaint.

The published terms give Adobe a substantive point: the annual-paid-monthly arrangement and its cancellation formula exist in writing. The government's answer is that written availability does not establish adequate presentation before consent. Those positions concern different parts of the same transaction.

Adobe's fiscal 2023 Form 10-K shows why subscriptions warrant close examination. For the fiscal year ended December 1, 2023, Adobe reported subscription revenue of $18.284 billion against total revenue of $19.409 billion. Subscriptions were its principal revenue source.

Those figures do not identify revenue from early termination fees or isolate the annual-paid-monthly plan. They cannot establish how much Adobe earned from the conduct challenged here. The relevant evidence remains the enrollment presentation, the fee formula, and the cancellation process, not the size of Adobe's subscription business alone.

Did the presentation obscure the commitment?

Yes, the checkout presentation documented in the complaint made a yearlong purchase easier to read as a monthly expense. Adobe disclosed an annual plan, but the government's evidence supports a narrower and substantial criticism: the monthly payment received prominence that the financial consequences of cancellation did not. The objection is not that Adobe offered installments. It is that the documented purchase path sold the installment more clearly than the obligation.