Toast lawsuit challenges POS fees and barriers to switching providers

Toast was sued Oct. 29, 2026, by the Federal Trade Commission and state officials over allegations that the restaurant software and fintech company saddles restaurants with hidden fees, unauthorized charges and unwanted add-ons; fails to deliver on its customer service promises; and makes it difficult to cancel services.

"Small businesses are the backbone of communities across the country, and they deserve tools and services that are transparent, reliable and truthful," said Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection.

Mufarrige added that Toast "failed to honor a number of its promises and instead imposed hidden fees, unauthorized charges and subscription traps that drained the hard-earned profits of businesses just trying to serve their customers. These practices are illegal, and the FTC will continue to take aggressive action to ensure a fair, transparent and competitive marketplace."

Joining the FTC in filing the lawsuit are the people of California, acting through the Los Angeles County Counsel and San Francisco City Attorney, and the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah.

Toast disputed the allegations and said it would vigorously defend itself. The company argued that the Restore Online Shoppers' Confidence Act does not apply to its negotiated business-to-business agreements with restaurants. Toast also said it had cooperated with the FTC's review since mid-2025 and sought a resolution without litigation.

Toast is a major player in the market for POS hardware and software and payment processing services for restaurants. Its cloud-based products and services are used to take and manage orders, accept payments, track inventory, and provide related functions. The fintech sells its software as an annual or biennial subscription service, billed monthly. The company also markets and sells financing products, called Toast Capital loans, to its customers.

Auto-renewing subscriptions and hidden fees draw scrutiny

To obtain Toast products and services, restaurants enroll in auto-renewing subscriptions, at an average cost of about $900 a month, depending on the number of terminals used and add-on services bundled into subscriptions, according to the Illinois attorney general's announcement in this case. Examples of add-on services include employee timekeeping, payroll processing and payroll tax filing.

According to the complaint, Toast customers frequently complain about being enrolled in and charged for add-ons without their consent. The complaint further alleges that Toast advertises a "Pay-as-you-Go" plan under which customers pay higher fees per transaction for payments processed through Toast, while getting hardware and software for $0 per month. The FTC and states allege Toast deceives customers by imposing fees for its hardware and software that it fails to clearly disclose.

For customers on that plan, the complaint alleges, those who fail to start processing payments within 120 days of purchasing their subscription must return all their hardware or pay its full retail value. Restaurants on the plan that close temporarily must pay an $85 monthly inactivity fee.

The complaint also alleges that Toast unilaterally charged restaurant patrons a $0.99 fee without adequate disclosure or consent from the patrons or restaurants. From September 2021 through late July 2023, Toast added the fee to certain online orders above $10 placed through its platform. This fee—which went to Toast rather than the restaurants—was on top of the fees the restaurants were already paying Toast for its services, according to the complaint.

Complaint details cancellation hurdles and added costs

The complaint further alleges that Toast failed to provide customers with a simple cancellation process. Instead, Toast instituted a counterintuitive, multi-step process requiring coordination among multiple teams within the company, leaving many customers to incur months or years of unwanted charges, the complaint alleges.

To cancel, Toast customers must first provide 30 days' written notice of their "intent not to renew"—a requirement not clearly disclosed during enrollment, according to the complaint.

Even when they provide timely written notice, multiple customers report receiving no response and incurring additional charges. Others are told to call customer care personnel or contact Toast via live chat, where they face questions about why they want to cancel and sales pitches intended to dissuade them, the complaint alleges.

Cancellation can also bring unexpected costs. Customers on the Pay-as-you-Go plan must pay an early termination fee of $150 for each remaining month of their contract—a charge not clearly disclosed during enrollment, according to the complaint. The complaint also cites one customer who reported being charged a $5,318.87 early termination fee, which Toast refused to refund, when the customer canceled an account after four years.

Customers with outstanding Toast Capital loans face an additional obligation. According to the complaint, if they cancel their subscriptions or change providers, Toast treats them as having defaulted on their loans and requires immediate repayment of the outstanding balance. The complaint alleges that this restriction pressures customers to continue paying unwanted subscription charges to avoid accelerated loan repayment.

Customers seeking help report delays and dead ends

The complaint further alleges that nearly every page of Toast's website highlights some variation of its promise to provide customer support 24 hours a day, seven days a week, including access to "[r]eal people with real solutions, who really get restaurants, 24/7." During enrollment, Toast lists "24/7/365 support" as a feature in each subscription package.

In reality, customers have difficulty reaching anyone who can provide support or answer their questions at any time of day, let alone "24/7," the complaint alleges.

One customer called Toast customer support on a Saturday, the complaint notes, only to be told that the team that could help him was unavailable on weekends—a situation that cost the business owner thousands of dollars in credit card transactions. Other customers reported spending weeks or months trying to resolve issues, often without follow-up or the promised "real solutions."

The complaint alleges that Toast's conduct violates the FTC Act, the Restore Online Shoppers' Confidence Act and related state laws. The lawsuit was filed in U.S. District Court for the Northern District of California.

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