FTC and multiple states sue Toast over hidden fees and deceptive subscription practices

Oct 29, 2026

The Federal Trade Commission, alongside eight states and local California prosecutors, filed a federal lawsuit against restaurant software company Toast Inc. on October 29, 2026. Regulators allege Toast used deceptive practices, including advertised zero-dollar plans with mandatory hidden fees, unauthorized online order add-ons, and restrictive cancellation hurdles that trapped business owners. Toast forcefully denied the allegations, maintaining that federal online shopping statutes do not apply to negotiated commercial contracts and pledging to fight the action in court.

Allegations of deceptive pricing and fees

▪The FTC suit alleges Toast Inc. deceptively advertises Pay-as-you-Go hardware and software plans for $0 while charging restaurants undisclosed mandatory fees and $85 monthly processing charges during temporary closures.
▪The FTC suit alleges Toast Inc. charges canceled subscribers undisclosed early termination fees of $150 for each remaining month on contracts that average approximately $900 monthly.
▪The FTC complaint alleges Toast Inc. added an unauthorized $0.99 fee to customer online food orders over $10 between September 2021 and late July 2023 without notifying restaurants or diners.

Allegations of burdensome cancellation and loan policies

▪The FTC complaint alleges Toast Inc. treats service cancellations by Toast Capital loan recipients as immediate loan defaults, demanding full remaining balances at once.
▪The FTC lawsuit alleges Toast Inc. requires 30 days of written cancellation notice without adequately disclosing the rule at sign-up, forcing customers through Byzantine cancellation processes.

Toast defends its practices and denies claims

▪Toast Inc. denied the regulator allegations on October 29, 2026, asserting that the Restore Online Shoppers’ Confidence Act does not apply to negotiated business-to-business contracts.
▪Toast Inc. stated it has cooperated with the Federal Trade Commission since mid-2025 and will vigorously defend its business practices through federal court litigation.

State co-plaintiffs participating in the lawsuit

▪The state co-plaintiffs suing Toast Inc. alongside the FTC include attorneys general from Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma, and Utah.
▪California joined the lawsuit against Toast Inc. through representation from the Los Angeles County Counsel and the San Francisco City Attorney.

FTC lawsuit filing

▪The FTC and multiple state regulatory authorities filed a lawsuit against Boston-based restaurant software provider Toast Inc.
▪The Federal Trade Commission commissioners voted 2-0 to approve filing the lawsuit against Toast Inc.

FTC deceptive practice claims

▪FTC Bureau of Consumer Protection Director Christopher Mufarrige stated that Toast Inc. imposed subscription traps and hidden fees that drained small business profits.
▪The FTC lawsuit alleges Toast Inc. violated the Federal Trade Commission Act and the Restore Online Shoppers’ Confidence Act through deceptive subscription and pricing practices.

Deceptive customer support claims

▪In one case cited in the complaint, a restaurant owner seeking customer support from Toast Inc. on a Saturday was told the helpful team did not work weekends.
▪The FTC complaint states Toast Inc. deceptively advertises continuous 24/7/365 support while customers frequently report being unable to obtain customer service assistance when needed.