Estimated reading time: 8 minutes.
Key facts
- The case: Federal Trade Commission, et al. v. Toast, Inc., et al., No. 3:26-cv-12705, U.S. District Court for the Northern District of California, filed October 29, 2026.
- Who sued: the Federal Trade Commission (FTC), the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah, and the People of California through the Los Angeles County Counsel and the San Francisco City Attorney.
- Who was sued: Toast, Inc., a Boston restaurant software and payments company, and affiliated companies including Toast Processing Services, xtraCHEF and the business behind its Toast Capital loans.
- Main allegations: "$0" hardware claims that hid fees, add-ons charged without consent, a $150 per month early termination fee, a written-notice cancellation process, "24/7" support claims, and a $0.99 fee added to some diners' online orders from 2021 to 2023.
- What it is not: a class action. It is a government enforcement case, and there is no claim form or refund program.
- Toast's position: the company says it "strongly" disagrees and will "vigorously defend" itself.
In this article
- What the lawsuit says Toast did
- The 99 cent fee on online orders
- How cancellation worked, according to the complaint
- The laws involved, in plain English
- What Toast says
- What the government is asking for
- What restaurant owners and diners can do
- What happens next
- Frequently asked questions
Toast sells the tablets, card readers, kitchen screens and software that many restaurants use to take orders and payments. It is a point-of-sale (POS) company, meaning it runs the system where a sale is rung up, and a payments company, meaning it processes the card transactions. The complaint says Toast serves about 156,000 restaurant locations and reported about $6.15 billion in revenue for 2025. About 82% of that came from financial services such as card processing, about 15% from subscriptions and about 3% from hardware, according to the complaint.
On October 29, the FTC and its state and local partners filed a 21-count lawsuit accusing Toast of charging restaurants fees they did not expect or agree to, and of making its contracts hard to leave. The FTC's commissioners voted 2-0 to file. These are allegations. No court has decided whether any of them are true.
What the lawsuit says Toast did
The complaint groups its allegations into several practices.
- "$0" hardware that was not free. Toast advertised a "Pay-as-you-Go" Starter Kit at "$0" per month, with higher per-transaction processing rates instead of upfront costs. The complaint says the $0 price covered only the first terminal, with fine print saying additional charges apply for other devices.
- Fees tied to the hardware. According to the FTC, customers who did not start processing payments through Toast within 120 days had to return the hardware or pay its full retail value. Restaurants that closed temporarily still had to pay $85 a month. Customers who canceled early owed an early termination fee of $150 for each month left on the contract.
- Expensive subscriptions and add-ons. Toast software is sold as an annual or two-year subscription billed monthly. The complaint says plans start around $90 per location per month, while the FTC says the average customer pays around $900 a month once terminals and add-ons are included. Add-ons named in the FTC announcement include employee timekeeping, payroll processing and payroll tax filing. The complaint says customers frequently complained about being enrolled in add-ons they never approved.
- Support promises. The FTC says Toast advertised "24/7/365 support" and "real people with real solutions." The complaint cites restaurant owners who said they could not reach anyone during service hours, including one who said that when he called with an urgent issue on a Saturday, he was told the only team that could help was closed on weekends, costing him thousands of dollars in card transactions.
- Toast Capital loans. Toast Capital, launched in 2019, offers financing to existing Toast customers. The complaint says the loan terms treat canceling Toast or switching to another POS system without Toast Capital's permission as an "Event of Default," which the complaint says led to unexpected, accelerated loan charges. The FTC says this restriction was not disclosed when customers applied.
The complaint says Toast received tens of thousands of complaints, and that consumers from California filed the most complaints with the FTC.
This is a government case, not a class action The FTC and the states are suing to stop the practices and recover money under their own enforcement powers. Restaurants and diners are not class members, and there is nothing to sign up for. Any refunds would depend on a court order or settlement that sets up a process.
The 99 cent fee on online orders
One part of the case involves restaurant customers, not just restaurant owners. The complaint says Toast began testing a $0.99 "Order Processing Fee" on online orders over $10 placed through its digital ordering tools around September 2021, expanded it across 14 test markets, and launched it to all eligible locations by June 2023.
According to the complaint, the fee went to Toast, not to the restaurant, and it was bundled into a "Taxes & Fees" line at checkout. The FTC says Toast added it without adequate disclosure to, or consent from, either the diners who paid it or the restaurants whose orders carried it. The complaint says Toast rolled the fee back in late July 2023 in response to widespread criticism from restaurants and industry experts, and that it has not refunded the money.
How cancellation worked, according to the complaint
The FTC calls Toast's cancellation process "counterintuitive" and "multi-step." According to the complaint:
- Customers had to give 30 days' written notice of their "intent not to renew" before the end of their contract term, a requirement the FTC says was not clearly disclosed when they signed up.
- Some customers who sent notice on time say they got no response and kept being charged.
- Others were directed to call Customer Care or use live chat, where they were asked why they wanted to cancel and pitched reasons to stay.
- Canceling before the term ended triggered the early termination fee. The complaint describes one restaurant charged $5,318.87 after four years as a customer and another invoiced $17,030.74 after canceling before it had used the system.
An auto-renewing subscription is a contract that renews automatically unless the customer cancels in time. The FTC calls a plan like this a negative option, because the customer's silence is treated as agreement to keep paying.
Why this case matters beyond Toast Federal law on subscription traps is usually applied to consumer products like streaming or memberships. Here the FTC is applying it to contracts between a technology vendor and small businesses. Toast says no court has done that before. How the judge rules could affect how other business software companies handle renewals and cancellations.
The laws involved, in plain English
- FTC Act, Section 5: bans "unfair or deceptive acts or practices." The complaint uses it for three counts: misrepresenting $0 hardware, misrepresenting customer support, and charging fees without consent.
- Restore Online Shoppers' Confidence Act (ROSCA): a 2010 law for subscriptions sold online. Sellers must clearly disclose the key terms before taking payment, get the customer's express informed consent, and provide a simple way to stop recurring charges. The complaint brings three ROSCA counts, one for each requirement.
- State laws: the remaining counts are under California's False Advertising Law and Unfair Competition Law, the Colorado Consumer Protection Act, Florida's Deceptive and Unfair Trade Practices Act, the Illinois Consumer Fraud Act, Iowa's consumer fraud law, Nebraska's Uniform Deceptive Trade Practices Act, Utah's Truth in Advertising Act and the Oklahoma Consumer Protection Act.
- Common enterprise: the complaint says Toast and its affiliates operated as one business with common ownership, officers, employees and offices, so each can be held responsible for the others' conduct.
What Toast says
In a statement issued October 29, Toast said: "We strongly disagree with the allegations in the lawsuit filed by the FTC and will vigorously defend the Company against the FTC's claims."
The company argued that ROSCA was written for online consumer subscriptions, not commercial deals. "No court has held that ROSCA applies to negotiated business-to-business agreements, and we don't believe it applies here," Toast said. It said it had cooperated with the FTC's review since mid-2025, that the FTC "disregarded the information we provided showing the extent to which our restaurant customers negotiate their contracts," and that "nothing about today's news changes our customer service, pricing, or support."
What restaurant owners can check now Pull your Toast merchant agreement and recent invoices. Look for your contract end date, the notice deadline for non-renewal, any early termination fee language, and every add-on you are billed for. If you have a Toast Capital loan, read what the agreement says about switching providers before you change systems.
What the government is asking for
The complaint asks the court for a permanent injunction, which is a court order barring the challenged practices going forward. It also asks for monetary relief for affected customers, and the states seek civil penalties and other remedies available under their own laws. The public complaint does not put a dollar figure on the money sought.
What restaurant owners and diners can do
There is no claims process today. Restaurants with complaints about Toast billing or cancellation can report them to the FTC at ReportFraud.ftc.gov or to their state attorney general. Diners who think they paid the $0.99 fee between 2021 and 2023 can keep old online order receipts that show a "Taxes & Fees" line, though the complaint does not say how any refunds would be identified or paid.
For cases that are accepting claimants now, see our list of class action cases you can join. We also covered a separate FTC case over Lens.com hidden fees.
This article is for information only and is not legal advice.
What happens next
Toast will respond to the complaint, likely with a motion to dismiss that tests whether ROSCA covers business contracts. Law360's case listing shows the case assigned to Judge Thomas S. Hixson in San Francisco. The case could settle at any stage, and a settlement or court order would be the step that determines whether restaurants or diners receive money. We will update this story as the case develops.
Frequently asked questions
What is the FTC lawsuit against Toast about?
The FTC and several states allege Toast hid hardware and cancellation fees, charged for add-ons without consent, overstated its support, made canceling difficult and added a $0.99 fee to some diners' online orders.
Is the Toast lawsuit a class action?
No. It is a government enforcement case brought by the FTC, seven state attorneys general and two California local government lawyers.
Can I get money from the Toast lawsuit?
Not now. The government is asking for monetary relief, but there is no settlement, judgment or claim form.
What was the 99 cent Toast fee?
According to the complaint, it was a $0.99 "Order Processing Fee" on online orders over $10 through Toast's ordering tools, tested from about September 2021 and removed in late July 2023. The complaint says the money went to Toast.
What is Toast's early termination fee?
The FTC says customers who cancel before their contract ends must pay $150 for each remaining month of the term.
Has Toast responded to the FTC?
Yes. Toast says it strongly disagrees, will fight the case, and does not believe the federal subscription law applies to negotiated business agreements.
