📅 29 October 2026 • FTC
FTC and 8 states sue Toast over hidden fees, unauthorized add-ons and cancellation traps
The Federal Trade Commission, together with the Los Angeles County Counsel and the San Francisco City Attorney for California and the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah, filed a lawsuit on 29 October 2026 against restaurant point-of-sale and fintech company Toast Inc. The complaint was filed in the U.S. District Court for the Northern District of California, and the Commission vote authorising it was 2-0. The agencies allege hidden and unauthorized fees, unwanted add-ons, misleading customer-support claims and cancellation obstacles. This is a complaint, not a court decision: the case will be decided by the court.
What the complaint alleges
Restaurants must enroll in auto-renewing subscriptions costing around $900 per month on average, with add-on services such as employee timekeeping, payroll processing and payroll tax filing bundled into plans. The complaint alleges customers were charged for add-ons without consent, and that the advertised "Pay-as-you-Go" plan with $0 hardware and software masks undisclosed costs. Clients who do not start processing payments within 120 days must return the hardware or pay its full retail value. Restaurants forced to close temporarily still owe $85 a month for payment processing. Cancelling allegedly triggers an undisclosed early termination fee of $150 per month for each remaining contract month.
The patron fee and the cancellation maze
The complaint also alleges Toast unilaterally added a $0.99 fee to certain online orders above $10 from September 2021 through late July 2023, without adequate disclosure to restaurants or their patrons, with the money going to Toast rather than the restaurants. One consumer reportedly faced an early termination charge of $5,318.87 after cancelling following four years. Cancellation allegedly requires 30 days' written notice of intent not to renew, a step not clearly disclosed at enrollment, after which customers are routed to phone or chat teams that question and pitch them to stay. Customers with a Toast Capital loan balance face accelerated repayment of the entire loan if they cancel or switch providers, which the complaint describes as a roadblock to cancellation. The advertised "24/7/365 support" is also alleged to be undeliverable in practice. The alleged conduct violates the FTC Act, the Restore Online Shoppers' Confidence Act and related state laws.
IMPACT
Subscription and fintech vendors should re-check fee disclosure at enrollment, records of add-on consent, cancellation flows and auto-renewal notices, because regulators are now applying consumer-protection law to business-to-business subscription traps. Companies bundling financing with subscriptions should examine whether cancellation accelerates loan balances, and whether early termination fees are clearly disclosed before signup. Regulators are seeking a permanent injunction, monetary relief and civil penalties. Courts decide such cases on the merits, so tracking the docket in the Northern District of California is the next checkpoint for compliance teams. Sources: ftc.gov, ago.nebraska.gov, qz.com
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