Adobe Inc. has agreed to a $150 million (£113 million) settlement with the U.S. Department of Justice over allegations that the software giant made its subscription services difficult to cancel and failed to clearly disclose early termination fees, according to court filings submitted March 13, 2026 in the U.S. District Court for the Northern District of California.
The proposed settlement-reached with the Justice Department and supported by the Federal Trade Commission-requires Adobe to pay $75 million in civil penalties and provide an additional $75 million in free services to affected customers. The agreement resolves a lawsuit first filed in June 2024, accusing the company of violating the Restore Online Shoppers' Confidence Act (ROSCA), a federal consumer-protection law governing subscription disclosures and cancellation procedures.
The settlement still requires court approval before it becomes final.
The case focused on Adobe's widely marketed "Annual, Paid Monthly" subscription plan, which government attorneys argued locked customers into yearlong commitments without clearly disclosing those obligations during sign-up.
Federal regulators alleged that the plan's Early Termination Fee (ETF)-which could amount to hundreds of dollars-was hidden within "fine print and inconspicuous hyperlinks" and only surfaced clearly when customers attempted to cancel their subscriptions.
According to complaint documents reviewed by regulators, an Adobe executive once described the early termination fee internally as "a bit like heroin for Adobe," reflecting how heavily the company relied on the charge to retain subscribers.
The Justice Department further argued that Adobe deliberately complicated the cancellation process.
In its June 2024 press release, the DOJ said customers trying to cancel subscriptions encountered "unnecessary steps, delays, unsolicited offers, and warnings," which the government characterized as a strategy designed to discourage users from completing cancellations.
The government lawsuit named two Adobe executives alongside the company:
- David Wadhwani, president of Adobe's Digital Media Business
- Maninder Sawhney, vice president of Digital Go-to-Market and Sales
Both remain named in the settlement order.
Under the proposed court order, Adobe must change several key subscription practices.
New requirements include:
- Clear disclosure of Early Termination Fees before customers enroll in a subscription plan
- Transparent explanation of how termination fees are calculated
- Advance notification before free trials lasting longer than seven days convert into paid subscriptions
- A simple and accessible cancellation process for subscribers
The Justice Department said affected customers will be contacted by Adobe directly once the court approves the settlement and implementation begins.
In a statement issued March 13, Adobe said it "disagrees with the government's claims and denies any wrongdoing" but added that it is "pleased to resolve this matter."
The company also said it has already implemented improvements to subscription disclosures and cancellation processes in recent years.
Justice Department officials framed the enforcement action as part of a broader push to protect consumers from deceptive online subscription practices.
Assistant Attorney General Brett A. Shumate, who leads the Justice Department's Civil Division, said: "American consumers deserve the right to make informed choices when deciding where to spend their hard-earned money."
Shumate added: "The Justice Department will strongly oppose any attempt to harm Americans with deceptive and unfair business practices."
The case highlights the financial importance of subscription services to Adobe's business model.
Government filings citing Adobe's public disclosures show rapid growth in subscription revenue:
- 2019: $7.71 billion (£5.8 billion)
- 2023: $14.22 billion (£10.75 billion)
By that point, subscription services accounted for the vast majority of Adobe's revenue.
The settlement arrives during a turbulent period for the company. Adobe revealed one day before the agreement was announced that longtime chief executive Shantanu Narayen plans to step down after 18 years leading the company, once a successor is named.
During Narayen's tenure, Adobe transformed itself from a boxed-software provider into a cloud-based subscription platform generating more than $19.4 billion (£14.67 billion) in annual revenue.
Investor pressure has also intensified as Adobe faces competition in an AI-driven software market. According to reporting by CNBC, the company's share price had fallen roughly 23% in the months leading up to the settlement announcement.
