Adobe exec described hidden pricing strategy as ‘a bit like heroin’

An Adobe exec is quoted as describing its hidden pricing strategy as being “a bit like heroin.” The remark was revealed when the government released its unredacted complaint, which accuses the company of deliberately making it hard to cancel a Creative Cloud subscription.

The exec acknowledged customer anger at the way the company made its contractual terms hard to understand, but said that improving this would result in “taking a big business hit” …

When you take out a Creative Cloud subscription, the automatically highlighted option displays a monthly cost, but is actually an annual subscription. If you subsequently cancel it within 12 months, you’ll be charged a hefty early termination fee.

We learned last month that the US Department of Justice (DOJ) worked with the Federal Trade Commission (FTC) to file a lawsuit against Adobe over this policy.

For years, Adobe has harmed consumers by enrolling them in its default, most lucrative subscription plan without clearly disclosing important plan terms. Adobe fails to adequately disclose to consumers that by signing up for the “Annual, Paid Monthly” subscription plan (“APM plan”), they are agreeing to a year-long commitment and a hefty early termination fee (“ETF”) that can amount to hundreds of dollars. Adobe clearly discloses the ETF only when subscribers attempt to cancel, turning the stealth ETF into a powerful retention tool…by trapping consumers in subscriptions they no longer want.

The Verge found the quote in the court filing.

Early termination fees are “a bit like heroin for Adobe,” according to an Adobe executive quoted in the FTC’s newly unredacted complaint against the company for allegedly hiding fees and making it too hard to cancel Creative Cloud. “There is absolutely no way to kill off ETF or talk about it more obviously” in the order flow without “taking a big business hit,” this executive said.

That’s the big reveal in the unredacted complaint, which also contains previously-unseen allegations that Adobe was internally aware of studies showing its order and cancellation flows were too complicated and customers were unhappy with surprise early termination fees.

Adobe’s chief in-house lawyer Dana Rao claimed that the remark was taken out of context, and that the employee who made it was not a C-level employee who could make decisions on such matters. The company also claimed that revealing the penalty fee would make the user interface “very cluttered.”

Adobe recently ran into trouble with a change to its terms & conditions that seemed to claim ownership of users’ work. The company later said that was a misunderstanding and changed the wording.

9to5Mac’s Take

This is a classic example of short-term thinking, where the financial gain from things like early termination fees is easily outweighed by the long-term damage to the brand.

Photo by Diana Polekhina on Unsplash