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

Canceling a software subscription is supposed to be easy—that’s what US law dictates. Adobe, however, has played fast and loose with its Creative Cloud subscriptions in the past. The company was sued by the Department of Justice in 2024 due to its practice of hiding hefty termination fees when customers signed up. The case has now been settled, with Adobe agreeing to a $75 million fine and matching free services to users of its products.

Turning software into a monthly subscription is all the rage these days, but Adobe was way ahead of the curve. The company began offering its suite of editing tools, like Photoshop and Illustrator, as a monthly subscription back in 2013, and most of its customers migrated to the new system.

It was easy for Adobe to get away with that shift because CS6, the last perpetual license offered for its editing tools, started at $700 and went up to more than $2,600 for all apps. By contrast, paying between $10 and $70 per month seems like a good deal, and it might be in the short term. Although anyone who has been paying monthly since the change has spent thousands of dollars on Adobe software. And when people noticed that and decided they wanted to cancel, many of them were frustrated with the outcome.

Core to the government’s complaint was Adobe’s practice of hiding cancellation fees for its subscriptions in the fine print or behind hyperlinks. Adobe charges 50 percent of the remaining subscription term when you cancel, which can be hundreds of dollars on annual plans. In addition, the company used labyrinthine phone trees to make canceling more difficult.

The DOJ alleged in its 2024 filing that Adobe’s handling of subscriptions violated the Restore Online ‌Shoppers’ ⁠Confidence Act, which was passed in 2010 to prevent deceptive charges in online services. With the newly announced settlement, Adobe will be able to wrap up the case for a relative pittance.

Adobe maintains innocence

The case could have been messy for Adobe if it had gone to court, but now that won’t happen. Under the terms of the settlement, Adobe has agreed to pay the government $75 million, but it doesn’t admit to violating the law.

“While we disagree ⁠with the government’s claims and deny any wrongdoing, we are pleased to resolve this matter,” Adobe said in a statement.

In addition to giving the government its pound of flesh, Adobe says it will provide $75 million in free services to affected customers. It is unclear from the statement which customers qualify or what they’ll get. We’ve asked Adobe for specifics, but it’s a safe bet that anyone who paid a cancellation fee is included. Adobe says it will reach out to these customers with details once it has made the necessary court filings to wrap up the case.

Don’t expect this outcome to change how Adobe does business today. The company claims it has rolled out changes to its sales pipeline in recent years to make the cancellation fees clearer at the time of purchase. And it’s undoubtedly going to continue focusing on subscriptions. Revenues have been growing steadily ever since it switched to Creative Cloud, and it made more than $7 billion in net profit last year. Writing a $75 million check to make this case go away is a big win for Adobe.