FTC and State Attorneys General Sue Toast Over Hidden Fees and Cumbersome Cancellations

Regulators File Lawsuit Against Toast

The Federal Trade Commission, together with California’s county and city attorneys and a coalition of state attorneys general, filed a complaint against Toast Inc. and its affiliates. The filing claims the company imposes hidden and unauthorized fees on restaurants that rely on its point‑of‑sale hardware, software and payment processing services.

Alleged Unfair Billing Practices

According to the complaint, restaurants that sign up for Toast’s subscription plans are often enrolled in additional services without clear consent. The agencies say Toast advertises a low‑cost “pay‑as‑you‑go” option but then adds undisclosed fees to hardware, software and transaction processing. The complaint also notes that customers were charged a small fee on certain online orders without proper disclosure, and that the company required payment for hardware even when merchants did not begin processing transactions within a set period.

Barriers to Cancellation

The regulators allege that Toast makes ending a subscription unusually difficult. The complaint describes a multi‑step process that demands written notice, coordination among several internal teams and repeated interactions with customer‑care representatives who may try to persuade merchants to stay. The agencies say many businesses reported receiving no response after providing notice and continued to incur charges. In addition, the complaint states that early termination fees were applied inconsistently and that borrowers with Toast’s financing product faced immediate repayment demands if they attempted to cancel.

Customer Support Claims Disputed

The complaint points out that Toast’s marketing emphasizes round‑the‑clock support, yet merchants have experienced long wait times and unavailability during weekends. One example cited involved a merchant who called on a weekend and was told the appropriate support team was not on duty, resulting in lost transaction revenue. The agencies say numerous owners have spent weeks trying to resolve issues with little follow‑up.

Legal Basis and Next Steps

The filing asserts that Toast’s conduct violates federal consumer protection statutes and related state laws. The FTC noted that the complaint was authorized by a vote of its commissioners and will be heard in a federal district court in California. The agencies emphasized that the action is intended to protect small businesses, which they describe as the backbone of local communities, by ensuring transparency and fairness in the marketplace.

The lawsuit targets a company whose services are widely used by independent restaurants for order management, payment processing and financing. If the court rules against Toast, the decision could reshape how technology providers disclose fees and handle cancellations, potentially prompting broader industry changes that benefit small‑business owners.