Adobe’s head office in San Jose, California

Adobe said US regulators are probing the company’s cancellation rules for software subscriptions, an issue that has long been a source of ire for customers.

The company has been cooperating with the Federal Trade Commission on a civil investigation of the issue since June 2022, Adobe said on Wednesday in a filing. A settlement could involve “significant monetary costs or penalties”, the company said.

Users of Adobe programs including Photoshop and Premiere have long complained about the expense of cancelling a subscription, which can cost more than US$700 annually for individuals. Subscribers must cancel within two weeks of buying a subscription to receive a full refund; otherwise, they incur a prorated penalty. Some other digital services such as Spotify and Netflix don’t charge a cancellation fee.

Digital subscriptions have been a recent focus for the FTC. It proposed a rule in March that consumers must be able to cancel subscriptions as easily as they sign up for them. “Too often, companies make it difficult to unsubscribe from a service, wasting Americans’ time and money on things they may not want or need,” US President Joe Biden said in a social media post at the time.

Adobe said the FTC alerted the company in November that commission staff say “they had the authority to enter into consent negotiations to determine if a settlement regarding their investigation of these issues could be reached. We believe our practices comply with the law and are currently engaging in discussion with FTC staff.”

Figma deal

Adobe is also working with regulators to smooth over concerns about its proposed $20-billion acquisition of design software maker Figma. The company said separately on Wednesday that it “strongly disagrees” with findings released by the UK’s competition regulator last month.

In February, Bloomberg News reported that the US Justice Department was preparing a lawsuit against the deal. Adobe said Wednesday that the justice department doesn’t have a formal timeline to decide whether to act against the purchase, but the company expects a decision “soon”.

Read: Adobe overhauls Creative Cloud suite for AI era

Also on Wednesday, Adobe gave a financial year sales forecast that fell short of analyst estimates. The shares declined about 6% in extended trading after closing at $624.26 in New York. — Brody Ford, with Leah Nylen, (c) 2023 Bloomberg LP