Digital creative software giant Adobe could face a hefty fine from U.S. regulators. The U.S. Federal Trade Commission is currently investigating Adobe's cancellation policies for its subscription-based software suite. Consumer protection agencies are scrutinizing Adobe under the Restore Online Shoppers' Confidence Act, a new law passed in 2023 that would require businesses to clearly spell out subscription terms, including any cancellation fees, when consumers sign up.
The FTC also recently filed a lawsuit alleging that Amazon's policies violated the Restoring Online Shopper Confidence Act.
Adobe confirmed in a recent 8-KSEC filing to investors that it is under investigation by the commission:
"Since June 2022, we have been working with Federal Trade Commission ("FTC") staff in response to civil investigative requests seeking information regarding our disclosure and subscription cancellation practices under the Restoring Online Shopper Confidence Act.
In November 2023, FTC staff asserted that they had the authority to enter into consent negotiations to determine whether a settlement of the investigation into these issues could be reached.
We believe our practices comply with the law and are currently in discussions with FTC staff. The defense or resolution of this matter could involve substantial monetary costs or penalties and could have a material impact on our financial results and operations."
In the company's recently released FY23 financial report, Adobe management confirmed that the creative mogul had revenue of $19.41 billion and operating profit of $6.65 billion:
Adobe CEO Shantanu Narayen said in the report: "Our strong performance reflects the critical role our products play in a digital-first world, incredible product innovation and outstanding execution." Adobe Creative Cloud, Document Cloud and Experience Cloud have become the foundation of digital experiences, from the moment inspiration strikes, to the creation and development of content and media, to personalized delivery and activation for every channel. Adobe's mission is to change the world through personalized digital experiences, and we provide the foundational technology platform that lays the foundation for our next decade of growth. "