FTC and Seven State Attorneys General Sue Toast Over Alleged Hidden Fees and Hard-to-Cancel Restaurant Subscriptions

FTC and Seven State Attorneys General Sue Toast Over Alleged Hidden Fees and Hard-to-Cancel Restaurant Subscriptions

The Federal Trade Commission, seven state attorneys general, and two California local government law offices sued restaurant point-of-sale company Toast, Inc. on October 29, 2026, alleging hidden hardware and processing fees, charges made without consent, and a cancellation process the plaintiffs say is designed to deter customers from stopping recurring charges.

Information last verified on October 30, 2026. This is a developing story; we update it as the record changes.

Status: Complaint filed October 29, 2026 in the U.S. District Court for the Northern District of California, Case No. 3:26-cv-12705. The case is at the pleading stage. No court has ruled on any claim, and every description of Toast's conduct below is an allegation the plaintiffs must still prove. We could not reach the docket to confirm any activity since filing.

Jurisdiction scope: This is a federal civil enforcement action in the Northern District of California, with supplemental state-law claims under the consumer protection statutes of California, Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah. It does not create new rules anywhere. Readers outside those jurisdictions are affected only indirectly, through whatever relief, if any, the court eventually orders.

What Happened

On October 29, 2026, the FTC and a coalition of state and local law enforcers filed a complaint captioned Federal Trade Commission; The Attorneys General of the States of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah; The People of the State of California, acting by and through Los Angeles County Counsel Dawyn R. Harrison and San Francisco City Attorney David Chiu v. Toast, Inc. The defendants are Toast, Inc., a Delaware corporation headquartered at 333 Summer Street in Boston, plus Toast Processing Services, LLC, Stratex HoldCo, LLC, Strategy Execution Partners LLC, and xtraCHEF, LLC (Complaint paras. 22 to 26). The document is styled a Complaint for Permanent Injunction, Monetary Judgment, Civil Penalty Judgment, and Other Relief, and runs 71 pages.

The complaint describes Toast as a restaurant software and financial technology company serving 156,000 locations globally (Toast's own quarterly report for the period ended June 30, 2026 puts the figure at roughly 180,000 locations, so the complaint's number appears to predate the filing), with reported total revenues of $6.153 billion in fiscal year 2025, $4.960 billion in FY 2024 and $3.865 billion in FY 2023 (para. 32). Roughly 82 percent of FY 2025 revenue, $5.037 billion, came from financial services including payment processing and loans; about 15 percent, $936 million, from subscription services; and about 3 percent, $180 million, from hardware sales (para. 32).

The plaintiffs' core theory is laid out in the summary of the case. The complaint alleges that Toast promises customers pay "$0" for Toast products under certain pricing plans and promises customer support "24/7/365," and that "none of Toast's hardware is $0" while customers "frequently claim that they cannot get customer support at any hour of the day" (para. 12). It further alleges that Toast "has failed to provide a simple method for customers to cancel their subscription services, instead imposing a series of onerous hurdles" (para. 13), and that "at least tens of thousands of consumers have complained about these issues to the FTC, online, and directly to Toast" (para. 14).

The fees the complaint describes

On hardware, the complaint alleges that customers on the Pay-as-you-Go plan must pay the full retail value of the hardware, "often costing thousands of dollars," if they do not start processing payments within 120 days of purchasing their subscription, and that this term "only appears in a gray, fine-print disclosure scroll box which appears towards the end of the enrollment process" (para. 43). The same paragraph alleges that restaurants with temporary closings "have to pay $85/month," a fee the complaint says "is only disclosed on the final checkout screen at the very bottom of the page, in tiny font hidden 8 lines in amongst a block of other tiny text disclosures." (The FTC's press release and the complaint both tie the $85 charge to temporary closings, and the press release calls it a payment-processing fee. The checkout text the complaint reproduces as Exhibit 8 labels it an inactivity fee of $85 per month, waived if the restaurant processes at least one card transaction in the preceding period.)

On early termination, the complaint alleges that customers who cancel "are required to pay an ETF of $150 per month for each remaining month of their contract, no matter how long they've been processing payments with Toast" (para. 44), that this term is not disclosed in the fine-print scroll box or on the checkout screen, and that a consumer would have to open the hyperlinked Merchant Agreement and read to page 12 of 25, Section 8.4, "which is not labeled with any header," to find it (paras. 45, 103). The complaint reports one consumer who told the FTC he was charged a $5,318.87 early termination fee that Toast refused to refund after he cancelled following four years of service, and another who cancelled before receiving equipment and was invoiced $17,030.74 set to auto-draft from a business bank account (para. 102).

On cancellation mechanics, the complaint alleges Toast subscriptions auto-renew for successive one-year or two-year periods (para. 89); that customers cannot cancel online even though they can enroll online; and that a customer must give written notice of "intent not to renew" at least 30 days before the end of the term, a requirement the complaint says is discoverable only by opening the Merchant Agreement and parsing "the dense 17-line paragraph of text in Section 8.1" on page 11 of 25 (para. 90). It further alleges that cancelling customers must be routed to a non-public line Toast internally calls the "churn line," available only on weekdays between 9am and 5pm Eastern, even though Toast "prominently advertises 24/7 customer care" (para. 93).

On the patron fee, the complaint alleges that beginning at certain locations in or around September 2021 and launching to all Toast customer-restaurants by at least June 2023, Toast "unilaterally charged restaurant patrons a $0.99 fee on every online order greater than $10 placed through Toast's digital ordering channels," and that "none of the money collected from this fee went to the restaurant itself; it was all funneled directly to Toast" (para. 69). The fee allegedly appeared inside a pre-existing "Taxes & Fees" line rather than as its own item (para. 70), and the complaint alleges it was labeled an Order Processing Fee described as set by Toast "to help provide affordable digital ordering services for local restaurants," with nowhere any statement that Toast, not local restaurants, would keep it (para. 71). The complaint alleges Toast "rolled this particular fee back in late-July 2023 in response to widespread criticism" but "has yet to refund any of the proceeds from the fee to consumers" (para. 80).

On unauthorized charges, the complaint alleges that customers must always supply bank account information, a tax identification number, a Social Security number and a government-issued photo ID at enrollment, and that when Toast later charges for new add-on subscriptions it "automatically uses the bank account information already on file" (para. 85). It alleges customers "frequently complain that they have been enrolled in and charged for Toast subscription add-ons without their consent" (para. 86).

On financing, the complaint alleges that Toast Capital Loan holders "are forbidden from changing POS providers without Toast Capital's advanced permission," which Toast may withhold "in its sole discretion," and that Toast otherwise treats a change of provider as an "Event of Default" on the loan, a restriction the complaint says "is not disclosed at any point during the Toast Capital Loan application process" (paras. 108, 109).

The complaint also alleges that Toast insiders knew the around-the-clock support claim was inaccurate, citing a 2022 all-customer survey with written responses including "Toast support is now almost non-existent" and "Customer support is atrocious" (para. 60), and that Toast "has continued touting 24/7/365 customer support prominently across its website and enrollment flows through the present day" (para. 67). Several internal figures, including Toast's average monthly subscription revenue per customer and the total earned from the patron fee, are redacted in the public version.

The FTC's press release states that "the Commission vote authorizing the staff to file the complaint was 2-0," and quotes Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection, saying small businesses "deserve tools and services that are transparent, reliable and truthful."

What the Law Actually Says

FTC Act Section 5(a), 15 U.S.C. 45(a). The statute declares unlawful "unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce." Under 15 U.S.C. 45(n), an act cannot be condemned as unfair unless it "causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition." The complaint pleads these standards at paragraphs 112 through 114 and seeks relief under Sections 13(b) and 19 of the FTC Act, 15 U.S.C. 53(b) and 57b (para. 1).

The FTC brings three counts of its own. Count I alleges misrepresentations that Toast hardware is $0 under certain plans. Count II alleges misrepresentations that Toast provides customer support 24/7/365. Count III alleges unfairly charging consumers fees for which they gave no express informed consent.

ROSCA Section 4, 15 U.S.C. 8403. The Restore Online Shoppers' Confidence Act makes it unlawful to charge a consumer for goods or services "sold in a transaction effected on the Internet through a negative option feature" unless the seller (1) "provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer's billing information," (2) "obtains a consumer's express informed consent before charging" the consumer's card or account, and (3) "provides simple mechanisms for a consumer to stop recurring charges." A negative option feature is defined by reference to the FTC's Telemarketing Sales Rule, 16 C.F.R. 310.2(w), as a provision under which the customer's silence or failure to reject or cancel "is interpreted by the seller as acceptance of the offer." Under Section 5 of ROSCA, 15 U.S.C. 8404(a), a ROSCA violation "shall be treated as a violation of a rule under section 18 of the Federal Trade Commission Act," which is what opens the door to civil penalties generally, though in this complaint the only civil-penalty demand is the Plaintiff States' own, under their state statutes.

Counts IV, V and VI track those three ROSCA duties in order and are brought by all plaintiffs. The states' authority to join comes from 15 U.S.C. 8405(a), which lets "the attorney general of a State, or other authorized State officer" alleging a ROSCA violation "that affects or may affect such State or its residents" sue in federal district court "to obtain appropriate injunctive relief" (para. 2). The statute also reaches an "other authorized State officer," which appears to be the route for the Los Angeles County Counsel and the San Francisco City Attorney, since neither is a state attorney general. The complaint elides that clause when it quotes Section 8405(a) and does not say which clause the two offices invoke. Note the limit built into the statute: Section 8405(a) gives the states injunctive relief under ROSCA, not damages. Their monetary and penalty demands ride on state law.

The state statutes actually pleaded. Paragraph 20 of the complaint lists each plaintiff state's enforcement authority, and the counts name the substantive provisions:

• California (Counts VII and VIII): the False Advertising Law, Cal. Bus. & Prof. Code 17500 et seq., and the Unfair Competition Law, Cal. Bus. & Prof. Code 17200 et seq.
• Colorado (Counts IX and X): the Colorado Consumer Protection Act, Colo. Rev. Stat. 6-1-101 et seq., pleaded under 6-1-105(1)(i) and/or (1)(l) and under 6-1-105(1)(i) and/or (1)(e), with relief sought under 6-1-110 and 6-1-112 and authority under 24-31-101(1)(i)(II).
• Florida (Count XI): the Florida Deceptive and Unfair Trade Practices Act, Chapter 501, Part II, Florida Statutes, quoting 501.204(1) and the trade-or-commerce definition in 501.203(8), brought under 501.207(1)(b) and 501.207(3).
• Illinois (the second Count XI, plus Counts XII and XIII): the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2 and 505/7(a), incorporating Uniform Deceptive Trade Practices Act provisions at 815 ILCS 510/2.
• Iowa (Count XIV): the Iowa Consumer Fraud Act, Iowa Code 714.16, quoting 714.16(2)(a), with authority and remedies under 714.16(7) and (11).
• Nebraska (Counts XV and XVI): the Nebraska Uniform Deceptive Trade Practices Act, Neb. Rev. Stat. 87-302(a), with authority under 87-303.05 and 87-303.11.
• Utah (Counts XVII and XVIII): the Utah Truth in Advertising Act, Utah Code 13-11a-3(e) and 13-11a-3(i), with authority under 13-11a-4(1)(a)(i).
• Oklahoma (Counts XIX, XX and XXI): the Oklahoma Consumer Protection Act, Okla. Stat. tit. 15, 752(1), 752(2), 752(13), 752(14), 753(5) and 753(21), with authority under 756.1 and penalties and fees sought under 761.1.

The prayer for relief asks the court to enter a permanent injunction against future violations of the FTC Act, ROSCA and the enumerated state statutes; to award monetary and other relief within the court's power; and to award the plaintiff states "civil penalties, damages, restitution and/or forfeitures for each violation of their respective state laws," plus attorneys' fees, costs and expenses.

Analysis: Why This Matters

The following is analysis from the Recording Law Editorial Team.

Three features of this filing are worth separating from the headline.

First, the customers here are businesses. ROSCA speaks of "consumers," and the complaint uses that word throughout for restaurant operators who signed up online. The complaint leans into the point, alleging that many Toast customers "are small business owners who, operating with limited staff, constrained resources, and minimal margins, depend on reliable point-of-sale systems and responsive support" (para. 47). Toast's own quarterly report for the period ended June 30, 2026 says the company "strongly disagrees with the FTC's legal challenges to its practices, policies and procedures, including whether certain referenced laws apply to its type of business." Whether a federal online-subscription statute written for online shoppers reaches a merchant-services contract a business executes through DocuSign is a live legal question in this case, not a settled one.

Second, the pleading attacks disclosure architecture rather than silence. The complaint does not mainly allege that terms were absent. It alleges they were placed where a signing customer would not read them: page 11 or page 12 of a 25-page merchant agreement reachable only by clicking an optional hyperlink, an unlabeled Section 8.4, a gray scroll box, the bottom of a checkout screen. That is a theory about where a term lives, and it maps onto ROSCA's "clearly and conspicuously" language rather than onto a simple failure to disclose. Compare the FTC's approach in the Hopper hidden-fee enforcement action and the negative-option claims in the Hims and Hers subscription case.

Third, the state-federal pairing is doing specific work. ROSCA gives all eight state plaintiffs, the seven attorneys general and California's two local offices alike, injunctive relief only. Their state UDAP counts are what carry civil penalties, restitution and fees. That is why the filing reads as 22 counts instead of six, and it is why the practical exposure depends heavily on how many separate state-law violations a court might eventually find. Two of the plaintiff states have also been active on fees legislatively, which is worth reading alongside this suit: see Florida's restaurant fee disclosure law and the Illinois junk-fee ban.

We are not predicting how this comes out. Toast's response is not yet due under the Federal Rules of Civil Procedure, we were unable to read the docket, and the FTC's own notice states that the case will be decided by the court.

How This Affects You

If you run a restaurant on a point-of-sale contract. Nothing about this filing changes your contract. A complaint is a set of allegations, and the court has not altered anyone's obligations. What the filing does give you is a checklist of where expensive terms tend to sit. Pull your own merchant agreement and look specifically for the early termination provision, the auto-renewal term length, the notice window and the method required to give notice, any inactivity or minimum-volume charge, and any cross-default language in a linked financing agreement. Note the date you would have to give notice to avoid the next renewal, and note it somewhere you will see it. If you believe you were charged for an add-on you never authorized, your own bank statements and any written cancellation or opt-out request you sent are the kind of documentation a lawyer would ask for first.

If you were charged the 99 cent online order fee as a diner. The complaint alleges the fee ran from around September 2021 until late July 2023 and that none of it has been refunded. No refund program has been announced. There is no claims process attached to this lawsuit, and there is nothing to sign up for. Be skeptical of any site that says otherwise.

Where to complain. The FTC takes consumer reports at reportfraud.ftc.gov, and the complaint says at least tens of thousands of consumers complained about these issues to the FTC, online and directly to Toast, and that of the consumers who complained to the FTC, those from California filed the most (paras. 14, 110). Your state attorney general's consumer protection division takes complaints as well, and the attorneys general of the seven plaintiff states are already litigating this matter. California's claims here are brought not by the state attorney general but by the Los Angeles County Counsel and the San Francisco City Attorney on behalf of the People of the State of California. If a company is pursuing money from you personally, the general rules about what a collector can and cannot do are covered in our guide to debt collection practices. Note that the federal Fair Debt Collection Practices Act reaches only debts incurred primarily for personal, family or household purposes, so a business-to-business merchant-contract balance is largely outside it.

If you are considering legal action of your own. This is a government enforcement action, not a class action. It does not create an individual claim, and federal enforcement under the FTC Act or ROSCA carries no tolling provision for private claims; whether any state-law limitations period is affected is a question of that state's law. Whether you have one, and under which state's law, depends on facts a lawyer in your state needs to review.

This is general legal information, not legal advice. It describes allegations in a complaint that no court has adjudicated, and it does not evaluate anyone's particular contract or dispute. Consumer protection statutes, limitations periods and contract remedies vary by state and turn on specific facts. For advice about your own situation, consult a licensed attorney in your jurisdiction.

Related articles

• How the FTC applied negative-option rules to a subscription health service
• New York City's click-to-cancel and junk-fee requirements
• What the Hopper settlement established about fee disclosure

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Last updated: 2026-10-30. This is a developing story; details verified as of 2026-10-30.

Frequently Asked Questions

Has a court found that Toast charged hidden fees?

No. A complaint was filed on October 29, 2026 in the U.S. District Court for the Northern District of California, Case No. 3:26-cv-12705. No court has ruled on any count. The FTC states that it files a complaint when it has reason to believe that the named defendants are violating or are about to violate the law, and that the case will be decided by the court.

Who exactly is suing Toast?

The Federal Trade Commission, the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah, and the People of the State of California acting by and through Los Angeles County Counsel Dawyn R. Harrison and San Francisco City Attorney David Chiu. The defendants are Toast, Inc. plus Toast Processing Services LLC, Stratex HoldCo LLC, Strategy Execution Partners LLC and xtraCHEF LLC.

How many counts does the complaint plead?

Twenty-two. The counts are numbered I through XXI, but the numeral XI is used twice, once for the Florida count and once for the first Illinois count. Counts I through III are FTC Act claims brought by the FTC alone, Counts IV through VI are ROSCA claims brought by all plaintiffs, and the remainder are state consumer protection claims.

What is ROSCA and why does it apply to a point-of-sale subscription?

The Restore Online Shoppers Confidence Act, 15 U.S.C. 8403, makes it unlawful to charge a consumer for goods or services sold in a transaction effected on the Internet through a negative option feature unless the seller clearly and conspicuously discloses all material terms before obtaining billing information, obtains express informed consent before charging, and provides simple mechanisms to stop recurring charges. The complaint alleges Toast enrollment is completed online and auto-renews, which is the negative option feature it relies on. Toast has said in an SEC filing that it strongly disagrees with the FTC's legal challenges to its practices, policies and procedures, so this is a contested question in the case.

Can I get a refund of the 99 cent order processing fee?

There is no refund program. The complaint alleges Toast rolled the fee back in late July 2023 but has not refunded any proceeds. A filed complaint does not create a claims process, and no court has ordered any payment. Treat any website offering to file a claim for you on this matter as unverified.

What has Toast said about the case?

Toast issued a statement the day the complaint was filed. As reported by Nation's Restaurant News on October 29, 2026 and corroborated by the Boston Globe, Toast said it is 'prepared to defend our business and fight this unprecedented action through litigation,' and that 'nothing about today's news changes our customer service, pricing, or support.' Toast had not posted that statement on its own channels, and had made no SEC filing after October 29, 2026, as of October 30, 2026. In its quarterly report for the period ended June 30, 2026, Toast disclosed the underlying FTC Civil Investigative Demand received in June 2025, said FTC staff sent a draft complaint and proposed settlement order in June 2026, and stated that it strongly disagrees with the FTC and is prepared to litigate if necessary.

Who is the assigned judge, and has anything happened since filing?

We could not confirm either. The complaint itself requests assignment to the San Francisco Division but names no judge. CourtListener returned an authorization error and the Northern District of California electronic docket requires PACER credentials this newsroom does not use, so we could not read the docket. We are not going to guess at a judge or at post-filing activity. We will update this page when we can read the docket directly.

Does this lawsuit change my obligations under a current POS contract?

No. A complaint changes nothing about an existing agreement. Only a court order, a settlement, or a change by the company itself would. Your contract terms as written continue to govern unless and until that happens.