The Federal Trade Commission (FTC) and eight states have filed a lawsuit against Toast, a leading POS company for restaurants, over its contracts, fees and cancellation practices.
Toast markets and sells point-of-sale hardware, software and payment processing to pizzerias and other independent restaurants. It offers software as a subscription (SaaS) services that renew automatically.
The suit was filed on October 29 in the U.S. District Court, Northern District of California, by the FTC and the states of California, Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah.
Click here to read the complaint.
According to the complaint, which presents only one side of a legal argument, Toast allegedly enrolled restaurants in unwanted add-ons; obscured charges connected to its “$0 per month” plan; failed to provide promised customer support; and made cancellation difficult and expensive.
Toast responded to the complaint in a statement that read, “We strongly disagree with the allegations in the lawsuit filed by the FTC and will vigorously defend the company against the FTC’s claims.”
Click here to read Toast’s response to the lawsuit.
Toast alleges that the FTC is applying the Restore Online Shoppers Confidence Act (ROSCA), passed by Congress to “address certain online subscription practices,” to Toast’s commercial agreements with restaurant owners. “No court has held that ROSCA applies to negotiated business-to-business agreements, and we don’t believe it applies here,” Toast’s statement reads. “Such an application has the potential to rewrite the laws of commercial contracts and disrupt business-to-business providers across the economy, ultimately resulting in less competitive terms and more harm to small businesses.”
The Lawsuit’s Allegations
“Small businesses are the backbone of communities across the country, and they deserve tools and services that are transparent, reliable and truthful,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, in a statement published on the FTC’s website. “Toast failed to honor a number of its promises and instead imposed hidden fees, unauthorized charges and subscription traps that drained the hard‑earned profits of businesses just trying to serve their customers. These practices are illegal, and the FTC will continue to take aggressive action to ensure a fair, transparent and competitive marketplace.”
According to the complaint, “In numerous instances, Toast has used false claims to convince consumers to enroll in its subscription services. Specifically, Toast promises that Toast customers pay ‘$0’ for Toast products under certain pricing plans. Toast also promises customer support ‘24/7/365.’ In fact, none of Toast’s hardware is $0, and Toast customers frequently claim they cannot get customer support at any hour of the day.”
For clients looking to cancel their subscriptions, the lawsuit accuses Toast of “imposing a series of onerous hurdles, which compound to deter and prevent customers from stopping recurring charges.”
The complaint goes on to allege: “Even when customers have managed to navigate Toast’s Byzantine cancellation process and canceled their accounts, in many instances, Toast has hit them with unexpected high-dollar early termination fees (‘ETFs’) or continued to charge them for subscription services without consent.”
“At least tens of thousands of consumers have complained about these issues to the FTC, online and directly to Toast,” the FTC claims.
According to Toast, nearly 20,000 business run on its platform. Those clients must sign up for auto-renew subscriptions, the costs of which depend on the number of terminals used and add-on services—including employee timekeeping, payroll processing and filing of payroll taxes—bundled into the subscriptions.
Toast customers frequently complain that they have been enrolled in, and charged for, Toast subscription add-ons without their consent, according to the complaint.
The complaint further alleges that Toast advertises a “pay-as-you-go” plan where customers pay higher fees per transaction for payment processing while getting hardware and software for $0 per month. In a summary of the complaint, the FTC and state co-plaintiffs allege that “Toast deceives customers by imposing various types of fees on the cost of its hardware and software, which Toast fails to clearly disclose to its customers.”
For example, clients who don’t start processing payments within 120 days of purchasing their subscription reportedly must return all of their hardware or pay the full retail value of the hardware.
Additionally, restaurants that close temporarily are still required to pay $85 a month for payment processing, the complaint states. Customers who try to cancel their subscription allegedly have to pay an “undisclosed” early termination fee of $150 per month for each remaining month of their contract, according to the complaint.
Customer Support Issues
The FTC’s complaint also alleges that restaurant customers “do not actually receive the promised customer ‘support,’ nor can customers actually get help or assistance ‘24/7.’ In fact, Toast customers report having difficulty reaching anyone who can provide support or answer their questions at any time of day.”
According to the lawsuit, one customer complained to Toast in 2023: “I was sold great customer service when I committed to Toast in 2019 but was left high and dry. Bad taste still hasn’t gone away.”
Another customer reportedly noted that Toast claims to “provide unlimited customer service and support to our business” but that “Toast no longer provides anything close to adequate customer support. The customer support reps are completely unqualified and cannot assist with simple problems…We are asking Toast to stop advertising they have 24-hour customer support as the customer support they have in place is so painful to deal with that customers are forced to figure things out on their own.”
Customer Fees
The complaint also alleges that Toast unilaterally charged restaurant patrons a $0.99 fee on every online order greater than $10 placed through Toast’s digital ordering channels. “None of the money collected from this fee went to the restaurant itself; it was all funneled directly to Toast.”
The fee, the FTC alleges, was added “within a pre-existing line labeled ‘Taxes and Fees.’ Unless the restaurant patron noticed and clicked a small tooltip icon next to the words ‘taxes and fees,’ they would not know they were being charged a new hidden fee but would be left wondering why their order from this restaurant was more expensive than usual.”
Subscription Cancellation Practices
The FTC also accuses Toast of making it difficult for customers to cancel their subscriptions. “Toast instituted a counterintuitive, multi-step cancellation process that requires the involvement and coordination of multiple teams within Toast, leaving many customers to incur months or years of unwanted charges,” the complaint alleges.
According to the complaint, Toast customers must provide 30 days’ written notice of their “intent not to renew”—a requirement that “is not clearly disclosed” in the enrollment process. Even after doing so, “multiple consumers report receiving no response and incurring additional charges. Others are told to call Toast’s Customer Care or contact Toast via live chat where they are subjected to questions about why they want to cancel and sales pitches to dissuade them from canceling.”
And some customers report being charged “high, unexpected early termination fees” when they try to cancel, according to the complaint. One consumer complained that he was charged an early termination fee totaling $5,318.87 when he canceled his account after four years.
Toast’s Response
For its part, Toast says it “has been cooperating fully with the FTC’s review of this matter since mid-2025 and has engaged in good faith throughout, including efforts to reach a resolution short of litigation.
“The facts of the investigation show Toast’s commitment to providing innovative solutions to restaurants in a competitive market. The FTC disregarded the information we provided showing the extent to which our restaurant customers negotiate their contracts. We are prepared to defend our business and fight this unprecedented action through litigation.”
Toast’s statement concludes: “Nothing about today’s news changes our customer service, pricing or support. Nearly 20,000 business locations run on Toast because our platform helps them simplify operations and increase sales—and that commitment hasn’t changed. The trust our customers place in us is the foundation of our business, and we are as committed as ever to helping them succeed.”
