Toast FTC Lawsuit: What Restaurant Owners Need to Know and Do Right Now
If you run a restaurant or small business on Toast, a lawsuit filed this week deserves five minutes of your attention. On October 29, 2026, the Federal Trade Commission and a coalition of state and local governments sued Toast, Inc., one of the largest restaurant point-of-sale (POS) providers in the country. The government alleges hidden fees, charges merchants never agreed to, and a cancellation process built to keep restaurants locked in.
I read the complaint. My take: the allegations are strong, they're specific, and if you're a Toast customer, you should know what's in it.
The Toast FTC Lawsuit at a Glance
The FTC filed the case in the U.S. District Court for the Northern District of California. Seven state attorneys general joined it (Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah), along with Los Angeles County and the City of San Francisco on behalf of California.
The claims are brought under three sets of laws:
The FTC Act, which prohibits unfair and deceptive business practices.
The Restore Online Shoppers' Confidence Act (ROSCA), which governs subscriptions sold online and requires clear disclosure, informed consent, and a simple way to cancel.
State consumer protection laws in the participating states.
You can read the full complaint on the FTC's website: Toast Redacted Complaint (PDF).
What the Complaint Alleges Against Toast
Here are the core allegations, in plain English.
1. Add-ons merchants never agreed to
The complaint alleges that merchants were enrolled in, and billed for, add-on services such as payroll and employee timekeeping without their consent.
2. "$0 hardware" that wasn't really $0
Toast's Pay-as-you-Go plan was marketed with $0 upfront hardware, paid for through higher processing rates. According to the complaint, the plan did not clearly disclose a $150-per-month early termination fee for every month left on the contract, or that the hardware had to be returned or paid for in full if processing didn't start within 120 days.
3. A 99-cent fee on online orders
Toast allegedly added a $0.99 fee to online orders. Your customers paid it, and Toast kept it, not the restaurant.
4. A cancellation maze
Canceling required 30 days' written notice, and merchants were allegedly bounced between teams whose job was to talk them into staying. One merchant was hit with an early termination fee of more than $5,300 after four years as a customer.
5. Loan consequences
For merchants with a Toast Capital loan, canceling could trigger immediate repayment of the balance.
6. "24/7 support" that wasn't
Toast advertised round-the-clock support, but the complaint cites customers who reported getting no response, or reaching people who couldn't solve their problem.
How Toast Is Responding
Toast denies the allegations and says it will fight the case in court. Its main argument is that its contracts are negotiated business agreements, and that ROSCA, a law aimed at online subscriptions, doesn't apply to them. Toast also says the FTC disregarded information showing how often restaurants negotiate their terms.
To be clear: these are allegations, not findings. Nothing has been proven. But having read the complaint, I think the government's case is strong. The allegations are specific, they're backed by what the government says are tens of thousands of customer complaints, and several of them don't depend on the contract at all. A fee a merchant never agreed to, or a charge passed on to diners and kept by the provider, isn't a question of negotiated terms.
"You Signed the Contract" Isn't the Whole Story
A lot of people will react to this case by saying, "You signed the contract. You should have read it." I practiced law for more than 20 years, and here's the problem with that argument.
A signature doesn't protect a company if the sales pitch created a false impression or talked the merchant into signing. Fine print doesn't fix a misleading headline or a misrepresentation made during the sale. If a rep promises "free POS" and the contract quietly says otherwise, the fine print doesn't automatically win.
And if you never agreed to a charge in the first place, there's no contract behind it at all.
Why This Case Matters Beyond Toast
This lawsuit isn't just about one company. There's very little direct regulation of how POS and payment processing companies sell to businesses. No federal agency writes rules for how merchant agreements, early termination fees, or "free POS" offers have to work. Business owners are generally treated as sophisticated parties who can protect themselves, even when it's a two-location pizzeria up against a public company with a legal department.
When there isn't a rule book, lawsuits like this one become the rule book. However this case turns out, it's likely to shape how the whole industry markets "free" equipment, discloses fees, and handles cancellations. If you accept card payments on any platform, it's worth watching.
What Toast Customers Should Do This Week
You don't need to panic, and you shouldn't make any rash moves. But you should get informed. Here's what I'd do:
Pull your last few monthly statements. Look for add-ons, subscriptions, or fees you don't remember approving.
Find your contract. Check your end date, your auto-renewal terms, and how much notice you have to give before it renews.
Look for an early termination fee. Find out whether one applies and exactly how it's calculated.
Check your Toast Capital loan, if you have one. Know what happens to the balance if you cancel or switch providers.
Don't cancel or sign anything new yet. Wait until you understand all of the above.
These same steps make sense for any POS or merchant services contract, not just Toast.
Want a Second Set of Eyes on Your Contract?
Merchant agreements and processing statements aren't written to be easy to read. If you'd like help, send me your contract or your statements. I'll go through them with you at no cost and tell you honestly what I see, whether or not you ever switch.
Call (603) 851-5737 or email rfojo@maxvalueprocessing.com.
This article is for general informational purposes only and is not legal advice. The allegations described are claims in the government's complaint and have not been proven in court.
Comments