Archive 2005: Carol M. Highsmith / public domain, cropped
The Federal Trade Commission and state and local officials have sued restaurant technology company Toast, alleging that hidden fees, unwanted add-ons and difficult cancellation procedures cost restaurant owners money and left them paying for services they did not want.
The FTC’s announcement Thursday also targets a historical 99-cent charge on some diners’ online orders. These are allegations, not a court finding. The agency says the case will be decided by the court.
Restaurant bills and cancellation costs
According to the FTC, Toast sells point-of-sale hardware, software and payment-processing services through annual or two-year subscriptions billed monthly. Regulators allege that subscriptions average around $900 a month, depending on terminals and add-on services, and that some customers were charged for add-ons without their consent.
The complaint challenges the company’s advertised “Pay-as-you-Go” offering, which promises hardware and software for $0 a month in exchange for higher processing fees. Regulators allege that other costs were not clearly disclosed, including a $150 early-termination charge for each remaining month of a contract and an $85 monthly processing charge for restaurants that close temporarily.
The FTC also alleges that cancellation could require several steps and teams, leaving some businesses with months or years of unwanted charges. For customers with Toast Capital loan balances, the complaint alleges that canceling a subscription or changing providers could trigger immediate repayment of the outstanding loan.
The 99-cent diner fee was historical
The alleged 99-cent fee applied to certain online orders above $10 from September 2021 through late July 2023, according to the FTC. The agency says it went to Toast, not the restaurant, and was added without adequate disclosure or consent. The complaint’s account does not establish that diners face that same charge today.
Toast previously disputed the FTC’s case
In its quarterly filing covering the period ended June 30, 2026, before the lawsuit, Toast said it strongly disagreed with the FTC’s legal challenges to its practices, policies and procedures, including whether certain laws applied to its business. It said it would vigorously defend its interests and was prepared to litigate. That filing is not a response issued after Thursday’s announcement.
The lawsuit was filed in the U.S. District Court for the Northern District of California. The FTC was joined by officials from California, Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah. The commission voted 2-0 to authorize the complaint.
JBizNews Desk | Washington
© JBizNews.com. All rights reserved. Unauthorized reproduction or redistribution is strictly prohibited.
