On June 17, 2024, the U.S. Department of Justice (DOJ) filed a complaint on behalf of the Federal Trade Commission (FTC) alleging that Adobe Inc. had failed to clearly and conspicuously disclose material terms of its "Annual, Paid Monthly" plans and made cancelling plan subscriptions unfairly difficult. The complaint named as defendants two Adobe executives responsible for digital sales and marketing. This complaint continues the FTC's recent trend of filing enforcement actions against both companies and responsible executives for allegedly deceptive subscription and cancellation practices referred to as "dark patterns." The FTC filed a similar dark patterns complaint against Amazon in 2023, which it later amended to add individual executives. The DOJ and FTC claim that dark patterns are "unfair or deceptive acts or practices" and thus violate Section 5 of the FTC Act and that they also violate the Restore Online Shoppers' Confidence Act.
Key Takeaways
- This complaint represents a continuation of the FTC's focus on dark patterns enforcement against unfair or deceptive practices by companies offering subscription services.
- The complaint is further evidence of the FTC's increased focus on individual executive accountability for corporate acts.
The FTC's Allegations and Relief Sought
Adobe is a software company known for popular design and productivity software applications, such as Acrobat, Photoshop and Illustrator. The FTC's complaint alleges that Adobe's current implementation of its "Annual, Paid Monthly" subscription plan and the cancellation process for that plan constitute unfair or deceptive practices.
This subscription plan is Adobe's default plan for its products and services, and is the first plan that appears on the page where consumers can select plans. The monthly fee for this plan makes it appear to be the lowest-priced plan on the selection page—but the plan is not, in fact, a monthly plan; it is instead a yearly plan with a penalty for termination before the year has passed.
According to the FTC's complaint, the subscription plan carries a "hidden" early termination fee (ETF) if a consumer wishes to terminate the plan after the free trial period but before a year has passed, which is not obvious to the consumer at the point of sale. Although the plan shows a monthly price at sign-up, the consumer can only see information on the ETF if he or she clicks on a small more information icon. But even if the consumer clicks on that icon, the complaint alleges, the information shown does not provide the exact monetary figure for the ETF, how Adobe reaches that figure, or how it applies to specific subscription terms. The only mention of the plan's one-year term appears in fine print on the payment information page, and there is no mention of the ETF by name or the amount to be charged.
The complaint also alleges that if consumers attempt to cancel their subscription plans through Adobe's online interface, they must navigate an extremely complicated online process with several unnecessary steps. If consumers attempt to cancel through customer service, they allegedly face delays, dropped calls and "resistance" from customer service representatives.
Notably, the complaint also names two Adobe executives: the senior vice president and president who oversee digital marketing and sales for Adobe. Although the complaint's description of the executives' specific involvement with Adobe's subscription practices is heavily redacted, in general it alleges that both executives directed and controlled Adobe's subscription system, and are thus liable for the unfair or deceptive acts or practices connected to it.
The complaint seeks relief in the form of civil penalties, monetary relief and permanent injunctions for all defendants, including the Adobe executives.
Significance of the FTC's Complaint
This complaint shows that the FTC is continuing to pursue enforcement actions against companies that provide subscription-based services for dark patterns practices that are allegedly unfair or deceptive. As former FTC attorney Katherine White has said, dark patterns actions have become a priority for the FTC in recent years, and there are no signs of that enforcement activity slowing down.
The complaint also continues the FTC's stepped-up enforcement against individual executives in consumer protection cases. After years of naming executives only when they were sole proprietors or "alter egos" of the corporate defendants, the FTC has increasingly been naming as defendants the executives of large companies.
In 2022, for example, the FTC filed a complaint against Drizly LLC and its CEO for a data breach. The resulting consent order required the CEO to implement information security training if he is a majority owner, CEO or senior officer with security responsibilities at any organization that collects data on more than 25,000 individuals. In 2023, the FTC amended a complaint against Amazon to add three executives who were allegedly responsible for the Amazon Prime program's dark patterns cancellation process. The amended complaint alleged that because these executives were actively involved in the conduct at issue, they allowed and furthered the allegedly illegal practices, and thus should be held individually liable.
Agency leadership has embraced this focus on individual accountability. Former FTC Commissioner Rohit Chopra and Commissioner Rebecca Slaughter have stated that naming individuals from larger companies can serve as a deterrent for consumer protection violations. And FTC Chair Lina Khan has stated that "overseeing a big company is not an excuse to subordinate legal duties in favor of other priorities."
Conclusion
Companies operating subscription services should be on notice that the FTC is continuing to pursue dark patterns enforcement with respect to subscription services and cancellation processes. In its complaint against Adobe, the FTC has also signaled its continued willingness to name executives responsible for corporate conduct as defendants in consumer protection actions. As this complaint shows, the consequences of being named in an FTC action may be significant for companies and executives, including civil penalties, monetary relief and permanent injunctions.
For More Information
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