FTC and eight states sue Toast over fees and cancellation terms

Based on the FTC's announcement, the Illinois attorney general's announcement, Toast's published response, Toast's Nov. 3, 2026 Q3 earnings call, and reporting by Payments Dive and PYMNTS. As of Nov. 5, 2026.

What happened

The Federal Trade Commission and eight states sued Toast, the restaurant point-of-sale (POS) and payments company, on Oct. 29, the FTC announced. The complaint alleges that Toast charged restaurants hidden and unauthorized fees, signed them up for add-ons they didn't want, and made its subscriptions hard to cancel.

These are allegations. The FTC says it files a complaint when it has "reason to believe" the law is being broken, and that "the case will be decided by the court" (FTC). Toast said it "strongly" disagrees and will defend itself (Toast).

Why it matters to you

The complaint is about terms many owners have signed: auto-renewing subscriptions, add-on services, early termination fees and notice periods for canceling. Whatever the court decides, the case is a reminder to know what your own contract says and what your statements actually charge.

Who sued, and where

The case was filed in the U.S. District Court for the Northern District of California, according to the FTC. The commission voted 2-0 to file it.

California joined the FTC through the Los Angeles County Counsel and the San Francisco City Attorney. So did the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah (FTC; Illinois Attorney General).

The complaint alleges violations of the FTC Act, the Restore Online Shoppers' Confidence Act (ROSCA, a 2010 federal law on online subscriptions) and state consumer protection laws, Payments Dive reported.

What the complaint alleges

Each point below is an allegation from the complaint, as summarized by the FTC and the Illinois Attorney General. No court has ruled on them.

• Fees on the $0 plan. The complaint alleges Toast advertises a "Pay-as-you-Go" plan with hardware and software for $0 per month, then adds fees it doesn't clearly disclose. One example it gives: customers who don't start processing payments within 120 days must return the hardware or pay its full retail value.
• Add-ons. The complaint alleges customers "frequently complain" they were enrolled in and charged for add-ons without consent. The FTC lists timekeeping, payroll processing and payroll tax filing as examples of add-ons.
• Early termination fee. The complaint alleges customers who cancel must pay an undisclosed early termination fee of $150 for each remaining month of their contract. It cites one customer charged $5,318.87 after four years.
• Cancellation notice. The complaint alleges customers must give 30 days' written notice of their "intent not to renew," and that this isn't clearly disclosed when they sign up. Some who sent notice got no response and more charges, it alleges. Others were sent to customer care or live chat, where they faced questions and sales pitches meant to keep them.
• Closed temporarily. The complaint alleges restaurants that close temporarily must still pay $85 a month for payment processing.
• Loan balances. For customers with a Toast Capital loan, the complaint alleges that canceling or switching providers is treated as a default, making the full loan balance due at once.
• Support. The complaint alleges Toast lists "24/7/365 support" in its subscription packages, while customers have difficulty reaching anyone who can help.

The complaint says subscriptions average around $900 a month, depending on terminals and add-ons, according to the FTC. That is an average across Toast customers, not a figure for any one restaurant.

The 99-cent online order fee

The complaint also alleges that Toast added a $0.99 fee to certain online orders above $10, from September 2021 through late July 2023 (FTC). The fee went to Toast, not the restaurant, and was charged "without adequate disclosure or consent" of diners or restaurants, the complaint alleges. Payments Dive reported that the complaint says Toast began testing the fee in some locations in September 2021.

Toast announced on July 19, 2023, that it would remove the fee. "We made the wrong decision," Chris Comparato, Toast's CEO at the time, wrote in a letter to customers (Toast).

What Toast says

Toast said it disagrees with the allegations and "will vigorously defend the Company" (Toast). It also disputes that ROSCA applies. "No court has held that ROSCA applies to negotiated business-to-business agreements, and we don't believe it applies here," the company said.

Toast said it has been "cooperating fully with the FTC's review of this matter since mid-2025." It said the FTC "disregarded the information we provided showing the extent to which our restaurant customers negotiate their contracts."

For current customers, Toast said: "Nothing about today's news changes our customer service, pricing, or support" (Toast).

On the Q3 earnings call (Nov. 3)

On Toast's Nov. 3, 2026 third-quarter earnings call, CEO Aman Narang answered a Wells Fargo question about the FTC suit. He said Toast is "incredibly disappointed" with the filing, has been cooperating for about a year, and that the company "fundamentally believe[s] their application of ROSCA is unprecedented for custom contracts in B2B" (Investing.com transcript; PYMNTS).

If ROSCA applied to B2B custom-negotiated contracts, he said, it would have "huge implications" for the industry. Toast has "a lot of confidence in our business practices and [is] ready to defend," and "what happens here and how we settle the suit is not going to change that over the long term," Narang said (transcript; PYMNTS).

Toast announced no fee, pricing, or cancellation changes on the call. Its Nov. 3 earnings release covers financial results and product news; it does not announce contract or fee changes tied to the suit.

What this means for owners

These steps make sense for any restaurant, on any POS. None depends on how the case turns out.

1. Read your statements line by line. Compare each recurring charge with what you signed up for. The complaint centers on add-ons owners say they never approved.
2. Find your contract's renewal and cancellation terms. Note the term length, the renewal date, how much notice you must give and in what form. The complaint alleges Toast requires 30 days' written notice before the term ends.
3. Find the early termination fee. Check how it's calculated and what it would cost today. Ask your provider in writing if the contract isn't clear.
4. Check for linked financing. If you have a loan or hardware financing through your POS provider, read what happens to it if you cancel or switch.
5. Put disputes and notices in writing. Keep copies and dates of anything you send.

The FTC takes reports of bad business practices at ReportFraud.ftc.gov, according to its announcement.

Details may change; we'll update this piece as the court and the parties publish more.