FTC and Seven States Sue Toast Inc. Over Hidden Fees and Difficult Cancellations
The Federal Trade Commission, joined by California and attorneys general from Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah, filed a lawsuit on Oct. 29, 2026 against Toast Inc., a restaurant point‑of‑sale and fintech provider. The complaint says Toast saddles small restaurants with hidden and unauthorized fees and makes it hard to end its services.
Alleged Unfair Subscription Practices
Toast sells its hardware, software and payment processing as an annual or biennial subscription billed monthly. Restaurants must enroll in auto‑renewing plans that average about $900 per month, depending on terminals and add‑on services such as payroll processing. The complaint alleges many businesses were enrolled in add‑on services without consent and were charged for them.
- 1Review your contract for auto‑renew and add‑on clauses
- 2Document any undisclosed fees or charges
- 3File a complaint with the FTC or your state attorney general
- 4Consult a consumer‑protection attorney for advice
Source: Federal Trade Commission
Hidden and Early‑Termination Fees
According to the filing, Toast imposes several undisclosed charges. Customers who do not start processing payments within 120 days must either return the hardware or pay its full retail price. Restaurants that temporarily close still owe $85 a month for processing. If a restaurant cancels early, the complaint says Toast charges an undisclosed fee of $150 for each remaining month of the contract. One plaintiff reported a $5,318.87 early‑termination charge after four years.
Unauthorized Customer Fees and Loan Restrictions
From Sep. 2021 through late‑July 2023, Toast added a $0.99 fee to online orders over $10 without clear disclosure. The fee went to Toast, not the restaurant. The complaint also says Toast treats subscription cancellation as a loan default for customers with a Toast Capital loan, demanding immediate repayment of the full loan balance.
What This Means for Restaurant Owners
Small‑business owners who use Toast should review their contracts for auto‑renewal clauses, early‑termination penalties and any add‑on services they did not request. If they have been charged hidden fees, they may consider filing a complaint with the FTC or their state attorney general. The lawsuit is pending in the U.S. District Court for the Northern District of California; no judgment has been made yet.
Restaurant owners who are unsure whether they have been overcharged or who face difficulties canceling their Toast service may benefit from consulting an attorney experienced in consumer protection and business law.
What this means: our conclusions
- What to watchIncreased Scrutiny of Restaurant Tech Fees
The lawsuit signals regulators are watching fintech providers that bundle software and financing, which could push companies to be more transparent.
- Good newsSmall Restaurants May Gain Leverage
If the case leads to a settlement, affected eateries could recover hidden charges and see clearer contract terms.
- RiskRisk of Large Penalties for Non‑Compliant Companies
Toast could face significant fines or injunctive relief, warning other SaaS vendors about undisclosed fees.
- What to watchWatch for Settlement or Court Orders
The case is pending; any court ruling could change how subscription contracts are written for restaurant tech services.
- What to doAction: Review Your Toast Agreement
Check for auto‑renew clauses, early‑termination fees, and unauthorized add‑ons; keep all billing records and consider legal counsel if you spot issues.
This article is general information based on Federal Trade Commission and court or agency records available at publication time. It is not legal advice; laws and deadlines differ by state and by case. Published October 29, 2026.
Source: Federal Trade Commission
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