Adobe Settlement Resolves DOJ Subscription Suit
Adobe settlement ends June 2024 subscription cancellation suit and imposes an injunction and $150 million cost, raising SEC disclosure and reserve questions.
KEY TAKEAWAYS
- Adobe agreed to a $150 million DOJ settlement with $75 million paid and $75 million in free services.
- Settlement imposes an injunction requiring clearer early-termination fee disclosures and simpler cancellation methods.
- No 8-K was identified, raising investor questions about SEC disclosure and reserve treatment.
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Adobe Inc. (ADBE) reached a $150 million settlement with the Justice Department on March 13, 2026, resolving a June 2024 subscription cancellation lawsuit. The agreement includes an injunction requiring clearer disclosures and simpler cancellation processes, the company and DOJ said.
Settlement Details and Legal Context
The settlement comprises $75 million in civil penalties payable to the Justice Department and $75 million in free services for qualifying customers, according to a DOJ press release. Adobe must disclose early-termination fees and their calculation before enrollment, send reminders before converting free trials longer than seven days into paid plans with fees, and provide straightforward cancellation methods.
The DOJ filed a proposed stipulated order in the U.S. District Court for the Northern District of California, where it awaits court approval. Adobe denies wrongdoing and said it will notify qualifying customers after the order is entered.
The lawsuit, filed in June 2024, alleged that Adobe violated the Restore Online Shoppers’ Confidence Act (ROSCA) by concealing early-termination fees—allegedly up to 50% of remaining payments in a subscriber’s first year—and obstructing cancellations through delays and offers. About 95% of Adobe’s first-quarter 2024 revenue came from subscriptions, highlighting the potential impact of the required changes.
The DOJ Civil Division and the U.S. Attorney’s Office for the Northern District of California led the case, with coordination from the Federal Trade Commission’s Bureau of Consumer Protection.
Adobe said in a statement, "We have now finalized a settlement agreement with the Department of Justice."
