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FTC and states sue Toast over fees and hard-to-cancel restaurant plans
The Federal Trade Commission and several states sued Toast Inc. on Thursday, alleging hidden fees, unwanted add-ons and a cancellation process that trapped restaurant customers, the agency said.
The Federal Trade Commission and prosecutors in California and seven other states sued restaurant software and payments company Toast Inc. on Thursday, alleging hidden and unauthorized fees, unwanted subscription add-ons, a hard-to-use cancellation process and unmet promises of round-the-clock customer support1.
The complaint was filed in the U.S. District Court for the Northern District of California1. Joining the FTC were the People of California through the Los Angeles County Counsel and the San Francisco City Attorney, and the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah1.
Toast sells point-of-sale hardware and software and payment processing to restaurants, typically as auto-renewing subscriptions billed monthly, the FTC said1. The complaint puts the average cost at about $900 a month, depending on terminals and add-ons such as timekeeping and payroll1.
Prosecutors allege restaurants were enrolled in add-ons without consent and that an advertised Pay-as-you-Go plan hid fees on hardware and software1. Examples in the complaint include a requirement to return hardware or pay full retail value if payments do not start within 120 days, an $85 monthly processing charge during temporary closures, and an undisclosed early-termination fee of $150 per remaining month1.
The complaint also alleges that from September 2021 through late July 2023 Toast added a $0.99 fee to some online orders above $10, without adequate disclosure to diners or restaurants, and kept the money rather than sending it to the restaurants1.
Cancellation, the FTC said, required 30 days’ written notice of an intent not to renew, a step it said was not clearly disclosed at signup, and then multiple internal teams1. Some customers reported no reply and continued charges; others were steered to sales pitches1. One customer, the complaint said, was charged a $5,318.87 early-termination fee after four years1. Customers with Toast Capital loans who cancel or switch providers are treated as in default and must pay the outstanding loan at once, according to the complaint1.
The complaint alleges Toast advertised 24/7/365 support while customers could not reach staff who could help, including on weekends1. It cites alleged violations of the FTC Act, the Restore Online Shoppers’ Confidence Act and related state laws1.
The Commission vote authorizing the complaint was 2-01. The FTC said a complaint is filed when staff have reason to believe the law is being violated and that a court, not the agency, will decide the case1.