FTC and Eight States Sue Toast Over Deceptive Billing Practices
Regulators allege the restaurant software provider used hidden fees and complex cancellation traps.
1Regulatory Action Against Toast
The Federal Trade Commission and eight states have filed a lawsuit against Toast, a major restaurant software and payments provider. The 71-page complaint alleges the company utilized hidden fees, unauthorized charges, and subscription traps. Regulators claim these practices unfairly drained profits from businesses attempting to serve their customers effectively.
2Disputed Legal Interpretations
Toast strongly disagrees with the allegations and intends to contest the case in court. The company argues that the Restore Online Shoppers’ Confidence Act does not apply to negotiated business-to-business agreements. Toast maintains that its contracts with restaurants are distinct from the consumer-facing subscriptions typically covered by this specific federal law.
3Subscription and Hardware Costs
The FTC reports that restaurants pay approximately $900 monthly for auto-renewing subscriptions. While Toast advertises a zero-dollar hardware plan, the complaint alleges that no hardware is actually free. Customers are required to process payments within 120 days or face significant penalties, including paying the full retail price for equipment.
4Early Termination and Loan Penalties
Customers attempting to cancel early face undisclosed fees of $150 for each remaining month on their contract. One specific case cited involved a $5,318.87 termination fee charged after four years. Furthermore, Toast treats cancellation as a loan default for those with capital agreements, demanding immediate repayment of the full balance.
5Impact on Restaurant Diners
The complaint highlights that Toast added a $0.99 fee to online orders exceeding $10 between September 2021 and July 2023. Regulators allege that neither restaurants nor diners were properly informed or asked for consent regarding these charges. The collected funds were retained by Toast rather than being distributed to the restaurants.
6Support and Cancellation Barriers
Despite promises of 24/7 support, the FTC claims restaurant owners frequently struggle to reach assistance. Cancellation requires a 30-day written notice, which is allegedly not clearly disclosed during sign-up. Some customers reported receiving no response to their requests, while others were redirected to aggressive sales pitches intended to prevent their departure.
7Financial Scale of Operations
Toast reported $6.153 billion in revenue for 2025, with approximately 82% originating from payment processing and loans. The company serves between 156,000 and 200,000 locations according to conflicting data from the complaint and company statements. This massive footprint underscores the significant impact these alleged billing practices have on the restaurant industry.
8Legal Demands and Future Implications
Plaintiffs are seeking a permanent injunction, restitution for affected customers, and civil penalties under various state laws. The complaint lists 21 distinct counts involving the FTC Act and consumer protection statutes. As no court has ruled on these claims yet, the outcome could redefine how B2B software providers structure their contracts.
Original article: The Next Web — FTC and Eight States Sue Toast Over Deceptive Billing Practices