Full Breakdown
FTC and States Sue Toast Over Alleged Hidden Fees and Subscription Traps
By Drooid · · How we work
In this breakdown
01
Core Event
The Federal Trade Commission and attorneys general from Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma, Utah and California filed a lawsuit in the U.S. District Court for the Northern District of California against Toast Inc., a Boston-based provider of point-of-sale systems, payment processing and online ordering. The complaint alleges Toast concealed product costs, enrolled restaurants in unauthorized add-ons, misrepresented 24/7 support and imposed cancellation procedures that resulted in hidden and early-termination fees.
02
Background & Context
Toast serves roughly 200,000 small- and medium-sized restaurants nationwide and generated more than $6 billion in revenue in 2025, with over 80 % derived from financial services such as payment processing and business loans. Its “Pay-as-You-Go” plan marketed as $0 per month for hardware and software offsets costs with higher transaction-processing fees. Between September 2021 and July 2023 the company also charged a 99-cent fee on online orders over $10, a practice the complaint says was not disclosed to operators.
03
Data & Statistics
- The FTC complaint states average monthly subscription costs are about $900, varying with terminals and add-on services.
- Early-termination fees of $150 per remaining month of a contract are alleged, along with a requirement to return hardware or pay its full retail price if processing does not begin within 120 days.
- One restaurant faced a termination charge of $5,318.87 after ending a four-year account.
- More than a dozen owners reported difficulty reaching support staff despite promises of “24/7/365” assistance.
04
Official Statements & Responses
- Iowa Attorney General Brenna Bird’s office reported thousands of complaints from restaurants in her state about unexpected charges and inadequate assistance.
- Toast said it has cooperated with the FTC since mid-2025, disputes the agency’s application of the Restore Online Shoppers’ Confidence Act (ROSCA) to business-to-business contracts, and asserted the lawsuit will not affect its pricing, support or service. The company emphasized its commitment to the “trust our customers place” in its platform.
05
Criticism & Opposition
State officials argue Toast’s undisclosed fees and complex cancellation process harm small businesses. The FTC and participating states contend the company’s representations violate the FTC Act, ROSCA and various state consumer-protection statutes.
06
Verbatim Quotes
- “These practices are illegal, and the FTC will continue to take aggressive action to ensure a fair, transparent and competitive marketplace.” — Boston-based Toast
- “Toast failed to honor a number of its promises and instead imposed hidden fees, unauthorized charges and subscription traps that drained the hard-earned profits of businesses just trying to serve their customers,” — Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection
07
What’s Next
The complaint seeks a court order blocking the alleged practices, monetary damages and civil penalties. The case will proceed through the federal court system, where the parties may present evidence and arguments on the applicability of ROSCA and the legality of Toast’s subscription structures.