Adobe subscription cancellation just became a lot less predatory — and the company is paying $150 million to prove it. The DOJ and FTC filed suit against Adobe in June 2024, alleging the software giant buried early termination fees and made it deliberately difficult for users to exit their contracts, violating the Restore Online Shoppers’ Confidence Act (ROSCA). A settlement was announced on March 13–14, 2026, splitting the $150 million into two equal parts: $75 million in civil penalties and $75 million in free services for affected customers.
TL;DR: Adobe agreed to a $150 million settlement — $75 million in penalties, $75 million in free services — over hidden early termination fees on its Creative Cloud plans. The DOJ and FTC brought the case in June 2024. Adobe must now disclose fees clearly and offer simple cancellation methods.
What Did Adobe Actually Do Wrong?
Adobe’s core violation centred on its “Annual, Paid Monthly” Creative Cloud plan. Subscribers who signed up were not clearly told that cancelling early would trigger a fee of roughly half of all remaining payments owed under the contract — a figure that could run into hundreds of dollars depending on when in the billing cycle a user tried to leave. That’s not a footnote problem. That’s a structural trap.
The DOJ and FTC alleged that Adobe made this fee difficult to discover and the cancellation process deliberately cumbersome, both of which fall foul of ROSCA — a federal law designed to protect online shoppers from exactly this kind of hidden-cost scheme. Two executives, David Wadhwani and Maninder Sawhney, were named individually in the complaint, a signal that regulators wanted accountability at the leadership level, not just a corporate cheque.
It’s worth asking: how many subscribers paid that termination fee without realising they had grounds to push back? The $75 million earmarked for free services suggests the answer is: a lot.
How Does Adobe subscription cancellation Work After the Settlement?
Adobe subscription cancellation rules change significantly under the terms of the settlement. Going forward, Adobe must clearly disclose early termination fees before a customer enrolls — not buried in terms, not in a collapsed FAQ, but upfront and visible. The company must also notify users before a free trial converts to a paid subscription, provided the trial lasts more than seven days. And crucially, it must provide a simple, straightforward cancellation method.
These requirements sound basic because they are. The fact that a $150 million settlement was needed to enforce them says something uncomfortable about how subscription software businesses have operated. Adobe is not alone in using friction-heavy cancellation flows — but it is now the most expensive cautionary tale in the industry.
Who Gets the Free Services and How Much?
The $75 million in free services is earmarked for customers affected by Adobe’s practices. The settlement does not specify a per-user dollar amount in the sources available, and the exact distribution mechanism had not been publicly detailed at the time of the announcement. If you were a Creative Cloud subscriber on the “Annual, Paid Monthly” plan and paid an early termination fee you weren’t clearly warned about, you should watch for official communications from Adobe or the relevant federal agencies about how to claim.
The civil penalty side — $75 million — goes to the government, not to consumers. That distinction matters. The consumer-facing benefit is entirely in that free services pool, so the per-person value depends entirely on how many claimants come forward and how the fund is administered.
What This Means for the Broader Software Subscription Industry
Adobe is the biggest name to face this kind of federal enforcement action over subscription cancellation practices, but the underlying behaviour — obscuring exit costs, making cancellation multi-step, converting free trials without clear notice — is common across the software industry. This settlement sets a precedent that ROSCA has teeth, and that the FTC and DOJ are willing to name executives, not just companies.
Compare this to how streaming services handle cancellation: most allow single-click exits with no penalty, because the monthly model doesn’t lock users into annual commitments. Adobe’s “Annual, Paid Monthly” structure sits in a grey zone — annual commitment, monthly billing — and the company exploited that ambiguity. Post-settlement, that grey zone gets a lot brighter. Other software vendors running similar hybrid plans should take note.
Is the Adobe settlement money going directly to customers?
Only part of it. The $150 million settlement splits into $75 million in civil penalties paid to the government and $75 million in free services for affected customers. The free services portion is the consumer-facing remedy. Watch for official claims processes from Adobe or federal agencies if you were on an affected plan.
Which Adobe plan was at the centre of the lawsuit?
The “Annual, Paid Monthly” Creative Cloud plan was the specific subscription at issue. Subscribers on this plan faced early termination fees of approximately half of their remaining contract payments — a cost Adobe allegedly failed to disclose clearly before sign-up.
What changes is Adobe required to make going forward?
Under the settlement terms, Adobe must disclose early termination fees clearly before enrollment, notify users before free trials longer than seven days convert to paid plans, and provide a simple cancellation method. These are injunctive requirements, meaning they are legally binding — not voluntary commitments.
Adobe’s $150 million settlement is a genuine consumer win, but it should never have taken a federal lawsuit to get here. Clear pricing, honest cancellation flows, and upfront fee disclosure are table stakes for any subscription business. The fact that one of the world’s largest software companies needed a court order to provide them is the real story — and every subscriber who ever struggled to cancel a Creative Cloud plan deserved better long before March 2026.
This article was written with AI assistance and editorially reviewed.
Source: Tom's Guide
