Adobe Faces Financial Penalties Due to an Ongoing FTC Investigation

Adobe building

It has been a busy week for Adobe, for good and bad reasons alike. In addition to recording record revenue, yet again, and being sued by a Dutch data watchdog for alleged illegal data collection, Adobe is also under investigation by the Federal Trade Commission (FTC) for its disclosure and subscription cancellation practices.

At the bottom of a new regulatory filing with the United States Securities and Exchanges Commission (SEC), Adobe discloses that since June of 2022, it has been “cooperating with the Federal Trade Commission (‘FTC’) staff in response to a Civil Investigative Demand seeking information regarding our disclosure and subscription cancellation practices relative to the Restore Online Shoppers’ Confidence Act.”

Adobe continues, “In November 2023, the FTC staff asserted that they had the authority to enter into consent negotiations to determine if a settlement regarding their investigation of these issues could be reached. We believe our practices comply with the law and are currently engaging in discussion with FTC staff. The defense or resolution of this matter could involve significant monetary costs or penalties and could have a material impact on our financial results and operations.”

As of writing, Adobe’s stock price is down just under 6.9% since opening at $593 per share on December 14. The stock closed the prior day at $624.26 per share.

As noted by 9to5Mac, the FTC has been working to make it easier for consumers to cancel subscriptions with its “Click to Cancel” proposal.

“Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place,” said FTC Chair Lina M. Khan in March of this year. “The proposed rule would require that companies make it as easy to cancel a subscription as it is to sign up for one. The proposal would save consumers time and money, and businesses that continued to use subscription tricks and traps would be subject to stiff penalties.”

Notably, Adobe updated its Adobe Help page on account cancellation on December 13, the same day it released its financial report and filed with the SEC concerning the ongoing FTC investigation. Aside from stylistic changes made when compared to an archived version of the page from 2021, a notable change Adobe has made is adding a note at the top of the page explaining that the terms and policies outlined in the help article apply only to Adobe subscribers in the United States. This note was absent in the most recently-archived version of the page, which Adobe had updated on November 1, 2023.

Image credits: Header photo licensed via Depositphotos.