FTC and eight states sue Toast over hidden fees, unwanted add-ons and hard cancellation for restaurants

The US Federal Trade Commission and eight states filed a lawsuit against Toast Inc. on 29 October 2026 in the federal court for the Northern District of California. California joined through two local government lawyers, alongside the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah. The Commission voted 2-0 to bring the case. The complaint says restaurants signed up to auto-renewing Toast subscriptions that average about $900 a month and were then billed for add-ons they had not agreed to, such as timekeeping and payroll tools. It also says the Pay-as-you-Go plan did not make hardware and software fees clear. Other charges named include $85 a month for card processing while a restaurant was temporarily closed and an early termination fee of $150 for each remaining month. Regulators also object to a 99-cent charge on some online orders over $10, which they say went to Toast rather than the restaurant. The case also targets the exit process. According to the FTC, cancelling took several steps and 30 days' written notice, so some businesses kept paying for months or years, and Toast Capital loans fell due in full when a customer left. The claims are brought under the FTC Act, the Restore Online Shoppers' Confidence Act and state consumer protection laws. Toast denies the allegations and says it will fight the case. It argues that the online-subscription law does not cover contracts negotiated between businesses. That argument matters well beyond restaurants. If the court accepts that the law applies to merchant service agreements, payment and point-of-sale providers that bundle processing, hardware and software into renewing contracts could face the same consumer-style disclosure and cancellation standards.