Adobe executive compared early termination fees to heroin for the company: court docs

US regulators sued Abode last month.

An Adobe executive allegedly likened early termination fees to heroin for the software company, according to newly unredacted documents in the US government’s lawsuit against the Photoshop and Creative Cloud maker.

The Justice Department and the Federal Trade Commission noted in the government’s unredacted lawsuit against the Adobe that a company executive admitted that the “hidden” early termination fee is “a bit like heroin for Adobe” and “there is absolutely no way to kill off ETF or talk about it more obviously [without] taking a big business hit.”

Last month, US regulators sued Adobe, accusing the company of violating federal laws designed to protect consumers by hiding pricey early termination fees and making it tough for users to cancel their subscriptions.

“For years, Adobe has harmed consumers by enrolling them in its default, most lucrative subscription plan without clearly disclosing important plan terms,” says the lawsuit, which also names two Adobe executives — Maninder Sawhney and David Wadhwani — as defendants.

The lawsuit says Adobe “fails to adequately disclose to consumers” that by signing up for its “Annual, Paid Monthly” subscription plan “they are agreeing to a year-long commitment and a hefty early termination fee” that can “amount to hundreds of dollars.”

“Defendants know that these inadequate APM plan disclosures harm and mislead consumers but continue to engage in these unlawful practices because better disclosures would hurt Adobe’s bottom line by reducing subscription revenues,” the unredacted lawsuit says.

In a statement posted to its website on Thursday, Abode’s general counsel and chief trust officer Dana Rao said that US regulators were “taking four-year-old conversations and details from employee emails out of context to supplement their claims.”

Rao said Abode is “disappointed that the government pored over tens of thousands of documents that we supplied and ended up with this complaint that both mischaracterizes our business and business decisions, and cherry picks old employee comments from four years ago from a non-executive team member, which they then take out of context.”

“We strongly disagree with this lawsuit’s characterization of our business and we will refute the FTC’s claims in court,” Rao told B-17 in a statment.

“The complaint is taking an old offhand comment out of context from years ago, out of the tens of thousands of documents Adobe provided to the FTC,” Rao added. “The early termination fees equate to minimal impact to our revenue, accounting for less than half a percent of our total revenue globally but is an important part of our ability to offer customers a choice in plans that balance cost and commitment.”