FTC and states sue Toast over restaurant fees and cancellation terms

FTC and states sue Toast over restaurant fees and cancellation terms

29 October 2026: The US Federal Trade Commission, California and seven state attorneys general have sued Toast, the restaurant point-of-sale and payments company, alleging hidden fees, charges for add-ons restaurants never agreed to, and a cancellation process built to keep them paying. The complaint, filed in the federal court for the Northern District of California after a 2-0 Commission vote, relies on the FTC Act, the Restore Online Shoppers' Confidence Act and state laws. These are allegations; the court will decide the case, and the FTC's release carries no response from Toast.

The fees the complaint lists

According to the FTC, restaurants are enrolled in auto-renewing subscriptions that average about $900 a month depending on terminals and add-ons such as employee timekeeping, payroll processing and payroll tax filing, and some were enrolled in and charged for add-ons without consent. Its other allegations:

• The "Pay-as-you-Go" plan advertises hardware and software at $0 a month while charging higher per-transaction fees that are not clearly disclosed.
• A restaurant that has not started processing payments within 120 days must return all the hardware or pay its full retail price.
• A restaurant that closes temporarily still pays $85 a month for payment processing.
• Cancelling costs an undisclosed early termination fee of $150 for each month left on the contract; one owner who cancelled after four years was charged $5,318.87, which Toast refused to refund.
• From September 2021 to late July 2023, Toast added a $0.99 fee to certain online orders over $10, which went to Toast rather than the restaurant.

Cancelling, and the Toast Capital loan

The complaint says customers must give 30 days' written notice of their "intent not to renew", a term not made clear at sign-up, and that notices went unanswered while charges continued, or were met with questions and sales pitches. A restaurant that cancels or switches providers while it has a Toast Capital loan outstanding is treated as in default and must repay the whole balance at once, which ties the payments contract to the financing.

The FTC also takes aim at Toast's "24/7/365" support claim, citing an owner told on a Saturday that the relevant team did not work weekends, and others who waited weeks or months for a fix. Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection, said: "Toast failed to honor a number of its promises," adding: "These practices are illegal."

What restaurant operators can check now

The plaintiffs are the FTC; California, through the Los Angeles County Counsel and the San Francisco City Attorney; and the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah. For a restaurant on Toast, or comparing it with rivals, the complaint is a list of contract terms to look for in any point-of-sale agreement: the renewal notice window, the early termination formula, fees while closed, hardware return terms and whether a merchant loan is cross-defaulted with the processing contract. Asking a vendor to state each in writing before signing costs nothing.

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Sources

• Federal Trade Commission: FTC, States Take Action Against Toast Inc. Over Hidden, Unauthorized Fees and Deceptive Subscription Practices, 29 October 2026
• Federal Trade Commission: complaint, FTC et al. v. Toast Inc. (redacted), 29 October 2026