The Federal Trade Commission and a group of states sued Toast on Thursday, October 29, accusing the restaurant point-of-sale company of charging fees its customers did not expect. The case was filed in federal court in California and alleges hidden fees, unauthorized charges, unwanted add-ons and cancellation terms that keep restaurants locked in.
What the FTC says Toast did
The FTC voted 2-0 to authorize the filing, which names Toast Inc. and affiliated entities as defendants. The FTC's case page lists co-plaintiffs including Los Angeles County, the San Francisco City Attorney, and the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah.
Some outlets describe the suit as brought by eight states, while the FTC's list names seven. The count changes depending on whether California's local offices are included, so treat any single state number with caution.
Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection, framed the case around “subscription traps that drained the hard-earned profits of businesses.” San Francisco City Attorney David Chiu said Toast “trapped” restaurants in inflexible subscriptions with hidden fees, according to the San Francisco Chronicle.
Toast disputes the allegations. In a statement reported by Yahoo Finance, the company said, “The FTC disregarded the information we provided showing the extent to which our restaurant customers negotiate their contracts.” Toast also says it cooperated with the FTC's review beginning in mid-2025 and tried to reach a resolution before litigation.
How the $0 plan was supposed to work
The core allegation centers on Toast's “Pay-as-you-Go” plan, which the company marketed as $0 a month for hardware and software. According to QSR Web's coverage, regulators say Toast recovered those costs through higher payment-processing fees. A low monthly price up front, with the real revenue coming from transactions and add-ons, is an easy pitch to a small restaurant.
Toast's scale makes the allegations hard to dismiss as a niche problem. Yahoo Finance reports the company brought in more than $6 billion in 2025 revenue. The FTC also put the average Toast subscription at about $900 a month, depending on equipment and add-ons, according to Dallas Express. That figure sits far above a $0 headline, which is why owners should compare total monthly costs.
| Item | What the sources report |
|---|---|
| Filing date | Thursday, October 29, 2026 |
| Court | Federal court in California |
| Headline pricing | $0 a month for hardware and software, per the allegations |
| Average monthly cost | About $900, depending on equipment and add-ons, per the FTC |
| Cancellation notice | 30 days, in writing |
| Termination fee example | $5,318.87 in one reported case |
| Fee revenue before 2023 suspension | More than $5.5 million, per the San Francisco Chronicle |
The 99-cent online order fee and the disputed dates
Regulators allege that Toast charged a 99-cent fee on certain online orders over $10, starting in 2021. The money allegedly went to Toast rather than the restaurants that accepted the orders. The San Francisco Chronicle reports that more than $5.5 million was collected before the charge was suspended in 2023.
The sources disagree on the timeline. Most reports place the start in September 2021 and the end in July 2023, though one account gives late July. Restaurant Dive reports that the charge ran from June 2023, which conflicts with the earlier start. Until the filing's exact dates are confirmed, the safest working range is 2021 to mid-2023.
Diners who ordered through Toast-powered online channels may have seen that fee. The complaint does not say Toast still charges it.
Cancellation rules, termination fees and Toast Capital loans
The complaint says customers can cancel only by giving 30 days' written notice, and that Toast does not clearly disclose that requirement at signup. Regulators also allege that canceling or switching providers can trigger demands to repay the full balance of a Toast Capital loan at once, according to The Next Web.
The penalties described in coverage are steep. The Next Web cites a $5,318.87 termination fee in one case, while Quartz reports a charge of $150 for each remaining month of a contract. These are examples from the reporting, not an average that applies to every customer.
The complaint also says Toast enrolled restaurants in add-ons they did not request, sometimes after they asked to cancel. It includes accounts from more than a dozen customers who could not reach anyone at Toast despite the company's “24/7 support” promises, as Yahoo Finance reported.
Is ROSCA a business law? The core legal fight
The complaint alleges violations of the FTC Act and the Restore Online Shoppers' Confidence Act, known as ROSCA, which was enacted in 2010, along with state consumer-protection laws. Payments Dive reports the case rests on those statutes. ROSCA was written with consumer purchases in mind.
Toast argues that the law covers consumer transactions, not commercial contracts between a software vendor and a restaurant. It also contests applying ROSCA to commercial agreements and says the FTC disregarded how restaurants negotiate their terms. No court has ruled on that question, and it is the main fight in the case.
The outcome matters well beyond Toast. If the court accepts the FTC's reading, subscription-cancellation rules could reach business software sold to small firms, from point-of-sale systems to payroll tools. If the court rejects it, enforcement against business software vendors would depend more on state law and FTC Act theories. Either way, software sellers would have to rewrite how they describe pricing and cancellation to business buyers.
Toast says it tried to reach a resolution before litigation, and the FTC has often settled recent tech matters through negotiation. Reporting so far does not describe any settlement talks since the filing.
What restaurant owners should do now
These steps are based on the allegations and are general consumer-protection practices, not legal advice.
- Pull your POS contract and find the notice period. The complaint cites 30 days of written notice.
- Check your invoices for add-ons you never requested, especially any added after you asked to cancel.
- Add up your total monthly cost, including processing fees, equipment and add-ons, rather than relying on the headline price.
- Review any Toast Capital loan and its repayment terms before you consider switching providers.
- Keep a dated log of every support contact, including the channel and what you were told.
- If you are locked into a multi-year contract, consider having a lawyer review the cancellation terms.
What comes next for Toast and business software
The same week, the FTC issued Section 6(b) orders to nine companies, including Uber, DoorDash and Walmart, asking how they use personal data to set prices. USA 24 covered that action in FTC orders Walmart, Uber, Delta and six others on personal data pricing. Together, the two actions show a wider federal focus on fees and data-driven pricing. States are moving as well, and legislators in at least 30 states considered pricing-related bills this year, according to ABC11 (AP).
Several questions remain open. Toast has said it will defend itself, and no ruling has been issued. Reporting has not confirmed whether other states or the Consumer Financial Protection Bureau will join, and the case docket number has not been reported.
The next filings will show how Toast answers the ROSCA question. If the court takes the business-contract argument seriously, every software vendor that sells monthly plans to small companies will watch closely. For restaurant owners, the signal to watch is whether Toast changes its fee disclosures and cancellation process while the case moves forward.
