Adobe's Early Termination Fee and the FTC/DOJ Case, Explained

Adobe sells most of its software, including Creative Cloud, Photoshop, and Acrobat, through subscriptions. When you buy through Adobe's website, one of the options, often pre-selected as the default, is the "annual, paid monthly" plan. Despite the word "monthly," this plan is a one-year commitment that is simply billed in twelve monthly installments.

That makes it different from two other choices. A true month-to-month plan usually costs more per month but has no yearly lock-in, so you can leave anytime. An "annual, prepaid" plan is the same one-year commitment paid in a single upfront lump sum. Because the annual, paid monthly plan looks and bills like an ordinary monthly plan, many customers do not realize they have agreed to a full year, and that leaving early can trigger a fee.

Adobe's subscription terms give you a short window to change your mind: if you cancel within 14 days of your initial order, you receive a full refund. After those 14 days, cancelling an annual plan before the year is up triggers the early termination fee (ETF). On the annual, paid monthly plan, the ETF is 50% of the payments remaining on your one-year term.

For example, if your plan costs $30 per month and you cancel with six months left, you have $180 in remaining payments ($30 multiplied by 6). The ETF is 50% of that, or $90, charged as a lump sum when you cancel. The earlier in the year you leave, the larger the fee, because more payments remain. Once you have completed the first year, the commitment is satisfied and you can generally cancel without an ETF.

Fees and exact terms can change over time and can vary by plan and region, so confirm the current figures in your Adobe account and in Adobe's published subscription terms before you act.

In June 2024, the U.S. Department of Justice, acting on a referral from the Federal Trade Commission, filed a complaint against Adobe Inc. and two executives, David Wadhwani, president of Adobe's digital media business, and Maninder Sawhney, a vice president, in the U.S. District Court for the Northern District of California. The FTC's commissioners voted 3-0 to refer the case.

The complaint alleged that Adobe steered customers to the annual, paid monthly plan by pre-selecting it as the default while prominently displaying only the monthly price. According to the government, Adobe buried the early termination fee and its amount, described as 50 percent of the remaining monthly payments when a consumer cancels in their first year, in small print or behind icons customers had to hover over to see.

The complaint further alleged that Adobe made cancelling difficult, routing customers through numerous web pages and, by phone or chat, subjecting them to resistance, delays, dropped connections, and multiple transfers, with some customers still being charged after they believed they had cancelled. The government said these practices violated the Restore Online Shoppers' Confidence Act (ROSCA), a federal law that requires clear disclosure of subscription terms and simple ways to cancel.

The case did not go to trial. After the court denied Adobe's motion to dismiss the government's claims, the parties reached a settlement. On March 13, 2026, the DOJ announced a proposed stipulated order, and on April 10, 2026, U.S. District Judge Noel Wise approved it, resolving the case against Adobe and both executives.

Under the order, Adobe agreed to pay a $75 million civil penalty and to provide $75 million in services to customers, a combined total of $150 million. Adobe did not admit wrongdoing and has publicly stated that it disagrees with the government's claims.

Beyond the money, the stipulated order imposes conduct requirements on Adobe. Adobe must clearly disclose any early termination fee, and how that fee is calculated, before enrolling a customer in a subscription. For any free trial lasting longer than seven days, Adobe must remind customers before converting them into a paid subscription that carries an early termination fee. And Adobe must give subscribers a simple, easy way to cancel.

Importantly, the settlement did not ban termination fees. Adobe can still charge an ETF on an annual plan. The requirements focus on disclosing the fee up front and removing the cancellation obstacles the government described, so customers know what they are agreeing to before they enroll.

This article is general information, not legal advice. If you were charged an early termination fee and believe it was not properly disclosed, you can review your own Adobe account and billing history, read Adobe's current subscription terms, and contact Adobe directly. You can also report concerns to the FTC at ReportFraud.ftc.gov.

Be cautious about how any consumer relief is handled. The $75 million civil penalty is paid to the U.S. government, not directly to individual customers, and any relief to customers would be announced through official channels. Watch ftc.gov and justice.gov for any official notices, and treat unsolicited "Adobe refund" emails, calls, or texts as potential scams; legitimate agencies will not ask you to pay a fee or share your passwords in order to receive money.