Adobe agreed to a $150 million settlement with U.S. authorities over claims it misled users and made cancelling Creative Cloud subscriptions difficult.

Adobe has committed to a US$150 million (A$230 million) settlement with US regulators over allegations that it made it difficult for customers to cancel software subscriptions, with half of the funds returned to affected users in the form of free services. The US government filed a lawsuit in June 2024 after looking into Adobe's subscription policies for programs like Photoshop and other Creative Cloud tools. The lawsuit was eventually settled.

As part of the settlement, Adobe will pay a US$75 million civil penalty to the U.S. Department of Justice and provide US$75 million worth of free services to eligible customers. Regulators alleged that the company encouraged users to sign up for annual subscription plans without clearly disclosing early termination fees. Some customers believed they were signing up for monthly plans but were actually committing to yearlong contracts that included cancellation charges amounting to about half of the remaining subscription cost.

Adobe was also charged by authorities with creating an overly complicated cancellation procedure that included numerous steps, delays and prompts meant to deter users from quitting the service. Adobe is required to simplify cancellation procedures and clarify subscription conditions as part of the agreement. Also the company should notify users before free trials that last longer than seven days automatically turn into paid subscriptions.

Despite denying any wrongdoing and disagreeing with the government's allegations, Adobe decided to settle the case to put an end to the legal proceedings. The company claimed to have a simple cancellation procedure and to be open about the terms and conditions of its subscription agreements. Also, the company added that in recent years, its cancellation and sign-up procedures have become even more open and efficient.

The settlement occurs at a critical juncture for Adobe, which is under increasing scrutiny from investors regarding its approach to the quickly developing AI business. This week, longtime CEO Shantanu Narayen also declared his intention to go after a successor is chosen. The company promised to get in touch with customers who qualify for the free service credits as soon as the court filings are complete.