The Federal Trade Commission sued Toast Inc. on Oct. 29, alleging the restaurant software company charged hidden fees and made canceling hard, the FTC said. Seven state attorneys general and two California local offices joined the FTC Toast lawsuit.
Toast sells restaurants the point-of-sale hardware, software and payment processing they run on, so leaving costs more than switching a subscription. The complaint puts the price of an early exit at $150 for each remaining month of the contract. A restaurant that cancels with 12 months left would owe $1,800 at that rate, a calculation from the complaint’s figure. Toast denies the allegations.
What the FTC Alleges About Toast’s Fees
The Los Angeles County Counsel and San Francisco City Attorney, on behalf of California, and the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah filed with the commission in the U.S. District Court for the Northern District of California. The commission voted 2-0 to authorize the case.
The complaint says Toast enrolled customers in add-on services such as timekeeping, payroll and payroll tax filing without consent. It says the “Pay-as-you-Go” plan advertises $0 monthly hardware and software but carries undisclosed fees. Restaurants that do not begin processing payments within 120 days must return the hardware or pay its full retail value, and restaurants that temporarily close still pay $85 a month for payment processing, the FTC said. From September 2021 through late July 2023, the complaint says, Toast added a $0.99 fee to certain online orders over $10. The fee went to Toast and not to restaurants, and neither diners nor restaurants were adequately told, the FTC said.
Cancellation Terms in the Complaint
Customers must give 30 days’ written notice that they will not renew, a requirement the complaint says Toast did not clearly disclose at enrollment. The FTC says Toast often did not answer those notices and kept billing, and that staff who did answer pitched customers against canceling by phone or chat.
One restaurant paid a $5,318.87 early termination fee after four years and was refused a refund, the complaint says. It also says canceling or switching providers can turn a Toast Capital loan into a default that requires immediate repayment of the full balance. Toast promotes 24/7/365 support, the complaint says, but an owner who called on a Saturday heard that the relevant team was unavailable on weekends, which allegedly cost the owner thousands of dollars in card transactions.
What Toast and the FTC Said
Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said, “These practices are illegal, and the FTC will continue to take aggressive action.” Toast said in a statement to Boston Globe that the FTC “disregarded the information we provided” about how restaurant customers negotiate their contracts, and that the company is prepared to defend itself through litigation.
Toast also said it has cooperated with the FTC since mid-2025 and argued that the Restore Online Shoppers’ Confidence Act protects consumers and does not cover contracts negotiated between businesses. The FTC brought the case under the FTC Act, that online shopping law and related state laws. The agency said the allegations are unproven and that the court will decide the case. Image: Federal government imagery from the FTC (public domain); a Toast logo requires clearance from Toast.
