Welcome to the Hotel Adobe: You can check out any time you like, but you can never leave.

That was the reality for many customers of San Jose software giant Adobe, federal authorities alleged.

Now, Adobe has agreed to pay a $75 million fine and provide an equal amount in free services to customers after federal authorities accused it of hiding a “hefty” early-cancellation fee from subscribers to its products like Acrobat and Photoshop — and thwarting customers’ efforts to cancel subscriptions.

“American consumers deserve the right to make informed choices when deciding where to spend their hard-earned money,” Brett Shumate, head of the U.S. Department of Justice’s civil division, said in a statement Friday.

The deal resolves a 2024 lawsuit by the Justice Department against the company and two senior executives, Maninder Sawhney and David Wadhwani. The company and executives were accused of violating federal consumer-protection laws including the Restore Online Shoppers’ Confidence Act.

Adobe in a statement Friday denied wrongdoing and said it disagreed with the government’s claims. In a 2024 court filing, the company said its sign-up page for subscriptions “expressly” stated that they were annual plans with a fee for cancellation after 14 days. Customers wishing to cancel could “easily and quickly complete Adobe’s online cancellation flow — or cancel by contacting customer service via phone or webchat,” the filing claimed.

The federal legal action targeted Adobe’s behavior after it shifted its flagship products, starting in 2012, from a buy-it-once model to subscriptions with monthly or annual payments.

Since at least 2019, Adobe signed customers up by default for its “Annual, Paid Monthly” plan. But when subscribers tried to cancel, the company would “ambush” them with an early-cancellation fee of up to hundreds of dollars, the lawsuit in San Jose U.S. District Court said. The fee trapped consumers in subscriptions they no longer wanted, the lawsuit said.

Disclosures about the fee, hidden in fine print and behind hyperlinks, were “designed to go unnoticed” and most customers never saw them, the lawsuit claimed.

The company’s subscription practices generated frequent complaints to the Better Business Bureau and Adobe’s community-support web pages, the lawsuit said. Adobe knew customers were often confused about the subscription plan’s terms and misunderstood them, the lawsuit alleged.

The company gave two main cancellation options: online, or by online chat or a phone call with customer service, the lawsuit said.

Online, customers had to “navigate numerous pages with multiple options, much of which is wholly unnecessary to honor consumers’ cancellations requests,” the lawsuit said.

Via customer service, subscribers encountered “resistance and delay from Adobe representatives,” and many were “subjected to a time consuming and burdensome process,” the lawsuit said.

Under the agreement, Adobe must clearly and conspicuously disclose recurring charges and cancellation fees before accepting consumers’ billing information. The company must also allow customers to cancel subscriptions through a simple mechanism like a “cancel” button.

The agreement, filed in court Friday and still needing sign-off from a judge, did not specify which consumers are to receive which free services.

Meanwhile, Adobe announced Friday that its CEO Shantanu Narayen would resign, as the company’s business model faces threats from generative artificial intelligence, a technology that can produce customized imagery and perform other processes overlapping with Adobe’s offerings. Narayen is to stay on as board chair, the company said.

“We are focused on selecting the right leader for this next exciting chapter of the company’s growth and are grateful for Shantanu’s continued leadership as CEO to ensure a smooth transition,” said Frank Calderoni, the board’s lead independent director, who will head up the search for Narayen’s successor.