Business & Consumer Protection
FTC and States Challenge Toast Fees and Cancellation Practices
The pending case alleges that restaurant customers faced undisclosed charges, unwanted add-ons and obstacles when trying to leave the service.
A multistate complaint
The Federal Trade Commission, two California local authorities and attorneys general from seven states filed a federal lawsuit October 29 against Toast Inc. and affiliated companies. The complaint alleges hidden and unauthorized fees, unwanted subscription add-ons, misleading support promises and barriers to cancellation. The case is pending in the Northern District of California, and the allegations have not been adjudicated.
The disputed subscription terms
Toast markets point-of-sale, payment-processing and business-management services to restaurants. Regulators allege some customers were enrolled in add-ons without consent and that material costs were not clearly disclosed during enrollment. The complaint also challenges conditions attached to a pay-as-you-go offering, temporary closure charges and early-termination fees calculated according to the time remaining on a contract.
Cancellation and financing
The government plaintiffs describe a multi-step cancellation process involving notice requirements, multiple service teams and retention efforts. They further allege that customers with Toast Capital balances can face accelerated repayment if they cancel services or change providers. That alleged link between a software subscription and embedded financing is a central business issue because it may affect the practical cost of switching even beyond a stated termination fee.
A charge placed on diners
The complaint also says Toast added a 99-cent fee to certain online orders above $10 from September 2021 through late July 2023 without adequate disclosure or consent from diners or restaurants. Regulators allege the fee went to Toast. The court will determine whether the challenged conduct violated the laws cited by the plaintiffs and what relief, if any, is appropriate.
Why small businesses should follow
The case reaches beyond one vendor because restaurants increasingly depend on integrated software, payments and financing. A low introductory price can be difficult to evaluate if later fees, add-ons or exit costs are unclear. Businesses comparing providers can ask for the complete contract, renewal rules, data-export terms and the effect of cancellation on financing. Those precautions do not resolve the lawsuit, but they address the commercial risks it highlights.
Primary evidence
Reporting note: This independently composed article is based on the linked primary records. Publication and event dates are stated separately. Agency claims are identified as such; an allegation, charge or scheduled event is not presented as a finding, conviction or completed event. Readers should consult the official record for amendments and later action.