The Federal Trade Commission, alongside attorneys general from eight states and two municipal legal offices, filed a federal lawsuit on Thursday, October 29, 2026, against restaurant software and financial technology provider Toast Inc. The action, lodged in the U.S. District Court for the Northern District of California, accuses the company of imposing hidden and unauthorized charges, trapping subscribers in complex cancellation procedures, and failing to deliver advertised customer support.
According to the complaint detailed by ago.nebraska.gov, Toast saddles restaurant operators with unexpected fees, unwanted add-ons, and restrictive loan terms. The legal challenge stems from coordinated enforcement involving the FTC, Los Angeles County Counsel, the San Francisco City Attorney, and the Attorneys General of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma, and Utah.
How the Pay-as-You-Go Plan Operates
At the center of the dispute is Toast’s “Pay-as-you-Go” subscription model. The company advertises $0 upfront hardware and software costs to attract independent eateries. However, federal and state investigators allege that this pricing structure conceals undisclosed fees and steep early termination charges.
FTC and states take action against Toast Inc. over hidden and unauthorized fees, deceptive subscription and cancellation practices and other unlawful conduct: https://t.co/CRXCvabTRS /1
Restaurants attempting to exit their agreements often encounter administrative hurdles. The filing states that Toast requires written notice, multiple rounds of customer-service contacts, and mandatory sales pitches before processing a cancellation. One customer reportedly incurred a $5,318.87 termination charge after walking away from the service.
Beyond exit costs, the complaint highlights a recurring $0.99 fee charged to customers without adequate disclosure.
FTC, states sue Toast over fees, deceptive subscription practices https://t.co/ugponGLnX5
Financing and Support Shortfalls
The legal action also scrutinizes Toast Capital loans. When restaurants attempt to cancel their subscriptions or switch to competing point-of-sale providers, the company reportedly demands accelerated repayment of any outstanding loan balances.
The lawsuit also targets the company's marketing claims regarding customer service availability. Toast routinely advertised “24/7/365” support for its point-of-sale systems. Investigators found that subscribers frequently experienced long delays, unavailable weekend assistance, and unresolved technical issues that persisted for weeks or months.
FTC AND SOME STATES FILE LAWSUIT AGAINST TOAST INC. OVER FEES, DECEPTIVE SUBSCRIPTION AND CANCELLATION PRACTICES, OTHER CONDUCT -STATEMENT
The S.F. city attorney and Federal Trade Commission allege in a new lawsuit that Toast, a prominent restaurant technology company, uses ‘hidden’ fees and other illegal business practices. https://t.co/OC2FbP2tjq
