FTC Sues Toast Over Hidden Fees: What Every Merchant Should Check

On October 29, 2026, the Federal Trade Commission and eight states sued Toast, the restaurant POS and payments company used by nearly 200,000 businesses, in federal court in Northern California. The complaint accuses Toast of hidden and unauthorized fees, subscriptions that are hard to cancel and a “24/7/365” support promise that customers say went unanswered.

These are allegations, not findings, and Toast says it will fight the case. But the practices described aren’t unique to one company, and every business that takes cards should know what to look for in its own agreement.

What the lawsuit alleges

According to the FTC:

• Fees that weren’t clearly disclosed. Toast advertises a Pay-as-you-Go plan at $0 per month with higher per-transaction fees. The complaint says other fees were layered on top, including the full retail price of the hardware if a restaurant didn’t start processing within 120 days, and $85 a month for payment processing even while a restaurant was temporarily closed.

• Add-ons nobody ordered. Toast subscriptions average about $900 a month, and restaurants complained of being enrolled in and billed for add-ons like payroll and timekeeping without their consent.

• A $0.99 fee on online orders. From September 2021 to late July 2023, Toast added $0.99 to certain online orders over $10. The fee went to Toast, not the restaurant, and the FTC says neither diners nor restaurants were properly told about it.

• Cancellation by obstacle course. Customers had to give 30 days’ written notice before renewal, a requirement the complaint says wasn’t clearly disclosed at signup. Some say their notices went unanswered, while others were routed to retention pitches. Canceling customers were charged an early termination fee of $150 for every month left on the contract. One owner was charged $5,318.87 after four years of service, and Toast refused to refund it.

• Loans that lock you in. Restaurants with a Toast Capital loan that canceled or switched providers could be treated as in default and owe the full balance immediately.

• “24/7/365” support. The FTC says customers struggled to reach anyone who could help. One owner who called on a Saturday was told the team he needed didn’t work weekends, a delay that cost him thousands of dollars in card sales.

The FTC says these practices violate the FTC Act, the Restore Online Shoppers’ Confidence Act and several state laws. The agencies are asking the court to stop the practices and to award damages and civil penalties.

What Toast says

In a statement reported by Nation’s Restaurant News, Toast said it strongly disagrees with the allegations and had worked with the FTC since mid-2025 to resolve them without a lawsuit. It said it is “prepared to defend our business” in court and argues that the online-shopping law the FTC cites doesn’t apply to contracts between businesses.

6 red flags to check in your own contract

• Automatic renewal with a notice window. Know your renewal date and the notice you must give. If you plan to leave, send written notice early and keep proof it was received.

• Early termination fees. Is it a flat fee or a charge for every month left on the term? A per-month fee can run into the thousands.

• “$0 per month” pricing. Free software and hardware get paid for somewhere, often through higher transaction rates or fine-print fees. Compare your total monthly cost, not the plan price.

• Charges you never approved. Read every line of last month’s processing statement and software invoice. Dispute anything you didn’t sign up for, in writing.

• Financing tied to your processor. If a loan or cash advance comes due in full when you switch, you aren’t really free to leave. Know that before you borrow.

• Support you can actually reach. Call the support line on a Saturday night before you sign. If no one who can fix the problem answers, every outage costs you sales.

How we do it differently

We built our accounts so none of these traps can happen to our clients:

• Month-to-month terms with no early termination fee, so you can leave anytime

• No new fees from us, ever, beyond what’s on your signed application

• No setup, PCI compliance, statement, batch or annual fees

• Cost-Plus pricing at Interchange + 0.30% max, so every rate on your statement can be checked

• 24/7 US-based support from a real person, nights, weekends and holidays included

• Next-day funding and your own merchant ID

• Restaurant-ready POS options, including TableTurn and Clover, with a free Clover device for new accounts

If the Toast complaint sounds a little too familiar, find out what you’re really paying. Get your free savings analysis and our team will review your statement line by line and show you exactly what you’d pay with us, within one business day.

Quick answers

Has Toast been found liable? No. The FTC files a complaint when it has reason to believe the law is being broken. The allegations haven’t been proven, and the court will decide the case.

I use Toast. Should I switch? Start with your agreement: note your renewal date, the notice you have to give, any early termination fee and any loan terms. Toast’s POS only works with Toast’s own payment processing, so switching processors also means switching POS. If your contract terms are unclear, have an attorney review them.

What should I do about a charge I never approved? Write down the date and amount, dispute it with your provider in writing and keep copies. You can also report it to the FTC at ReportFraud.ftc.gov.

Related: Choosing the Right Payment Processor.