The Federal Trade Commission and state officials sued Toast Inc. on Oct. 29, alleging fees and contract terms in its restaurant services imposed unexpected costs on operators and diners.
California was represented by Dawyn R. Harrison, Los Angeles County Counsel, and David Chiu, San Francisco City Attorney; attorneys general from Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah also joined the case. The complaint names Toast Inc. and five affiliates as defendants. The case remains pending in federal court in the Northern District of California.
The FTC says the complaint describes auto-renewing software subscriptions, billed monthly, that average about $900 a month based on the number of terminals and add-on services. The agency says Toast promoted a Pay-as-you-Go plan with hardware and software priced at $0, alongside higher transaction fees. Restaurants that did not begin processing payments within 120 days allegedly had to return the equipment or pay its retail price; temporarily closed restaurants still owed $85 a month for processing, according to the complaint. Early cancellation could bring a $150 charge for each month remaining on the contract, it alleges.
The complaint also alleges Toast charged diners $0.99 on certain online orders above $10 from September 2021 through late July 2023. The FTC says the fee was not adequately disclosed to diners or restaurants and went to Toast.
On subscription cancellations, plaintiffs say customers needed to give 30 days’ written notice before renewal and deal with multiple company teams. The complaint cites one customer report of a $5,318.87 early termination fee. It also alleges Toast advertised “24/7/365” support while customers sometimes struggled to reach staff able to resolve problems.
Toast said it strongly disagrees with the lawsuit and will defend itself. The company argues the Restore Online Shoppers’ Confidence Act (ROSCA) does not cover negotiated business-to-business agreements with restaurant customers. The FTC alleges violations of the Federal Trade Commission Act and ROSCA; state plaintiffs claim violations of state consumer-protection laws. Plaintiffs seek an injunction, monetary relief and civil penalties, and the FTC says the filing was authorized by a 2-0 commission vote. A court has not ruled on the claims.
