Adobe Exec: Hidden Early Termination Fees ‘A Bit Like Heroin’

An Adobe executive said the quiet part out loud, saying the company’s hidden early termination fees (ETFs) were “a bit like heroin for Adobe.” The Federal Trade Commission filed a la...
Adobe Exec: Hidden Early Termination Fees ‘A Bit Like Heroin’
Written by Matt Milano

An Adobe executive said the quiet part out loud, saying the company’s hidden early termination fees (ETFs) were “a bit like heroin for Adobe.”

The Federal Trade Commission filed a lawsuit against Adobe, accusing the company of “deceiving consumers by hiding the early termination fee for its most popular subscription plan and making it difficult for consumers to cancel their subscriptions.” The complaint revolves around Adobe’s practice of hiding the fact that customers who cancelled their “annual paid monthly” (APM) subscription in the first year would be liable for hundreds of dollars in penalties.

In an unredacted complaint uploaded by Vox, the FTC details the executive’s comments, including the fact that getting rid of ETFs would result in a big hit to Adobe’s business:

Defendants know that these inadequate APM plan disclosures harm and mislead consumers but continue to engage in these unlawful practices because better disclosures would hurt Adobe’s bottom line by reducing subscription revenues. As one Adobe executive admitted, the hidden ETF is “a bit like heroin for Adobe” and “there is absolutely no way to kill off ETF or talk about it more obviously [without] taking a big business hit.”

The FTC goes on to say that Adobe’s efforts to mislead consumers goes even further:

Adobe’s misconduct does not stop with concealing key APM plan terms to maximize profits. Adobe utilizes other onerous cancellation procedures to trap consumers in subscriptions they no longer want. Consumers attempting to cancel online are forced to navigate numerous hurdles, including hidden cancellation buttons and multiple, unnecessary steps such as pages devoted to password reentry, retention offers, surveys, and warnings. Consumers attempting to cancel via phone or chat experience dropped calls and chats, significant wait times, and repeated transfers. Adobe uses a dedicated “Retention” team to discourage subscribers who try to cancel. Adobe relies on such obstacles to thwart cancellations and retain subscription revenues, depriving consumers of a simple mechanism to cancel as required by law.

If the FTC is able to prove its case, it could have profound implications for the SaaS market, since Adobe is by no means the only company that engages in such behavior. Unfortunately for the company, having an executive acknowledge the rational behind the hidden ETFs goes a long way toward proving the FTC’s case.

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