Adobe has agreed to a US$150 million (A$230 million) settlement with US regulators over allegations it made it difficult for customers to cancel software subscriptions, with half of the amount going back to affected users in the form of free services.

The settlement resolves a lawsuit filed in June 2024 by the US government following an investigation into Adobe’s subscription practices for products including Photoshop and other Creative Cloud tools.

Under the agreement, Adobe will provide US$75 million worth of free services to eligible customers and pay another US$75 million in civil penalties to the US Department of Justice (DOJ).

Regulators alleged Adobe steered customers toward annual subscription plans while failing to clearly disclose early termination fees. According to the complaint, some users who signed up for what appeared to be monthly plans were actually committing to year-long contracts that included cancellation fees equivalent to roughly 50 per cent of the remaining subscription cost.

Authorities also accused Adobe of making the cancellation process unnecessarily complex, with multiple steps, delays and prompts designed to discourage users from leaving the service.

As part of the deal, Adobe must make subscription terms clearer and introduce simpler cancellation options. The company will also be required to notify users before free trials longer than seven days automatically convert into paid subscriptions.

Adobe said it disagrees with the government’s claims and denies any wrongdoing but chose to settle the case to end the litigation.

“We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process,” the company said in a statement. Adobe added that its sign-up and cancellation processes have become “even more streamlined and transparent” in recent years.

The settlement comes at a pivotal time for Adobe, which is facing growing scrutiny from investors over its strategy in the rapidly evolving AI market. Long-time chief executive Shantanu Narayen also announced this week that he plans to step down once a successor is appointed.

The company said it will contact customers eligible for the free service credits once court filings are finalised.