(Gabby Jones/Bloomberg via Getty Images)
Adobe is warning investors it could face a sizable fine from the Federal Trade Commission, which has been investigating the company’s cancellation practices.
Adobe disclosed the FTC investigation in a Wednesday SEC filing. The company says it’s been cooperating with the US regulator since June 2022 after it received a subpoena from the FTC.
According to the filing, the FTC is probing Adobe’s “disclosure and subscription cancellation practices relative to the Restore Online Shoppers’ Confidence Act,” which bars online vendors from charging users unless informed consent has been given.
This suggests the FTC’s investigation is about Adobe’s subscription products, which have gained a notorious reputation over the years for being hard to cancel, according to consumers. This includes allegedly forcing users to call the company to cancel, and charging them an early termination fee.
In the same SEC filing, Adobe signals that the FTC is preparing to penalize the company over the cancellation practices. “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,” the company said.
Although Adobe believes it’s been following the law, the company warned: “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.”
The investigation occurs as the FTC is developing new regulations to force vendors to make it easy to cancel subscription products. “For example, if you can sign up online, you must be able to cancel on the same website, in the same number of steps,” the regulator said in March following passage of the proposed rulemaking.