The Federal Trade Commission and eight states sued Toast Inc. on October 29, 2026, alleging that the Boston restaurant software and payments company sold "$0" hardware that restaurants ended up paying for, promised "24/7/365" support that customers could not reach, charged restaurants for add-ons they never ordered, and for almost two years collected a 99-cent fee from diners on online orders without telling either the diners or the restaurants that Toast kept it. Toast said the same day that it strongly disagrees with the allegations and will fight the case in court.

In Short

The US consumer protection agency and eight states say Toast, which sells checkout systems and card processing to restaurants, told restaurants its equipment cost $0 and its help line never closed, and that neither claim held up. They also say Toast made quitting slow and expensive, billed restaurants for extras they had not agreed to, and added a 99-cent charge to diners' online orders that went to Toast rather than the restaurant. Toast argues that the main federal law in the case was written for online shopping subscriptions and should not apply to contracts it negotiates with businesses. The answer to that question will decide whether companies selling auto-renewing software to small businesses face the same cancellation and disclosure rules that already apply to consumer subscriptions.

The case and who brought it

The complaint, filed in the US District Court for the Northern District of California and assigned to the San Francisco Division as case 3:26-cv-12705, runs to 71 pages. The Commission voted 2-0 to authorize it, according to the FTC. The co-plaintiffs are the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah, together with the People of the State of California, represented by Los Angeles County Counsel Dawyn R. Harrison and San Francisco City Attorney David Chiu. That makes eight states in total, seven of them through their attorneys general.

Five defendants are named in the caption: Toast, Inc., a Delaware corporation headquartered at 333 Summer Street in Boston, and four subsidiaries - Toast Processing Services, LLC, Stratex HoldCo, LLC, Strategy Execution Partners LLC and xtraCHEF, LLC. The subsidiaries handle payroll funds, tax payments, human resources and payroll sales, and invoice and data tools. Paragraph 27 of the complaint, which alleges that the companies operated as a "common enterprise," also lists Toast Capital LLC, the lending arm, even though Toast Capital LLC does not appear among the defendants in the caption.

"Small businesses are the backbone of communities across the country, and they deserve tools and services that are transparent, reliable and truthful," said Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection. "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. These practices are illegal, and the FTC will continue to take aggressive action to ensure a fair, transparent and competitive marketplace."

The federal claims rest on Section 5(a) of the FTC Act and Section 4 of the Restore Online Shoppers' Confidence Act, known as ROSCA. The states add their own statutes: California's Unfair Competition Law and False Advertising Law, the Colorado Consumer Protection Act, the Florida Deceptive and Unfair Trade Practices Act, the Illinois Consumer Fraud and Deceptive Business Practices Act, the Iowa Consumer Fraud Act, Nebraska's Uniform Deceptive Trade Practices Act, the Oklahoma Consumer Protection Act and the Utah Truth in Advertising Act. According to the complaint, "at least tens of thousands of consumers" have complained about the practices to the FTC, online and directly to Toast, and Californians file the most complaints to the FTC of any state.

None of this has been tested in court. The FTC's own release notes that the Commission files a complaint when it has "reason to believe" the law is being violated and that "the case will be decided by the court." The lead FTC attorneys are Stephanie Liebner, Carlton Mosley and Sally Tieu of the Bureau of Consumer Protection.

Toast by the numbers

The complaint draws its picture of Toast's business from the company's own reporting. Toast reported total revenue of $6.153 billion in fiscal 2025, $4.960 billion in fiscal 2024 and $3.865 billion in fiscal 2023. On PPC Land's calculation, that is growth of 28.3% in 2024 and 24.1% in 2025.

The mix matters for everything that follows. About 82% of 2025 revenue, or $5.037 billion, came from financial services, including payment processing and loans. Subscriptions, including the restaurant point-of-sale bundles, contributed about 15%, or $936 million. Hardware sales were about 3%, or $180 million.

The complaint puts Toast's footprint at 156,000 locations globally, with offices in eight countries and five US cities, including San Francisco. Toast's own statement on October 29 cited nearly 200,000 business locations. The documents do not say whether the two figures are measured at different dates or on different definitions.

A company that earns more than four-fifths of its revenue from processing card payments has an obvious reason to give terminals away and recover the cost through the processing rate. That is broadly what the "Pay-as-you-Go" plan does. The question in the complaint is not whether that model is legal, but whether restaurants were told what else they would pay.

The "$0" offer

Toast's self-service sign-up flow, reproduced in screenshots in the complaint, begins with "Starter Kits" priced at "$0/month" and described as "Ideal for single-location restaurants who need 1-2 terminals to get up and running." Clicking "Shop Now" leads to a screen stating the kit is "$0 to own." The countertop kit shown in the exhibits includes a Toast Flex POS terminal, a Toast Tap payment device, a data security router, point-of-sale software and self-service installation support.

The next screen offers three feature packages, all at "$0/mo" under Pay-as-you-Go pricing. The Basic package, which lists "24/7/365 Support" alongside payment processing and reporting, carries a card rate of 3.09% plus 15 cents per transaction. The Core package, which adds online ordering and DoorDash, Uber Eats and Grubhub integrations, is 3.39% plus 15 cents.

Then comes a choice between two plans. Pay-as-you-Go is selected by default and tagged "POPULAR." Its box reads: "Card transaction fee covers most costs. Additional costs for some customizations. Not a lease - you own the hardware." The alternative, Traditional pricing, shows $1,024.10 due upfront, $69 a month for software, and a lower card rate of 2.49% plus 15 cents.

The gap between the two card rates on the Basic package is 0.6 percentage points. On PPC Land's arithmetic, a restaurant processing $500,000 a year in card payments would pay about $3,000 more a year on Pay-as-you-Go than on Traditional, against $1,024.10 upfront and $828 a year in software fees under the Traditional plan. The complaint does not dispute that a higher card rate is the price of free hardware. Its case is that the rate was not the only price.

What the fine print said

According to the complaint, the "$0" headline does not hold for the second terminal. At the bottom of the Starter Kit page, "around six scrolls down," a disclosure reads: "Pricing includes first hardware terminal subscription. Additional charges apply for subsequent devices." The Illinois counts accuse Toast of advertising "$0 upfront for 1-2 terminals" with the intent of charging for the second.

Before checkout, a scroll box titled "Important notices before your order..." requires two checkboxes. One of them covers the "Pay-as-you-Go return and inactivity policy." That policy, visible in the complaint's Exhibit 6, says a restaurant must either process at least $50 in payments within 120 days of purchasing its subscription or return all the free hardware within 120 days. Otherwise Toast "may immediately terminate your subscription, and you may be charged a cancellation fee based on the list retail price of the applicable hardware as follows: $1,024.10." The complaint says the retail value of the hardware is "often costing thousands of dollars," and calls the disclosure a "gray, fine-print disclosure scroll box which appears towards the end of the enrollment process."

A second charge appears on the final checkout page. The complaint says restaurants that close temporarily "have to pay $85/month," and that this fee is disclosed only "at the very bottom of the page, in tiny font hidden 8 lines in amongst a block of other tiny text disclosures." The checkout screen itself, reproduced as Exhibit 8, describes the charge as an inactivity fee: "Pay-as-you-go subscriptions are subject to an Inactivity Fee of $85/month. This fee will be automatically waived when you have processed at least one card transaction in the 90 days preceding a billing cycle." A sidebar on the same page tells buyers to complete at least one credit card transaction within 90 days of purchase to avoid it.

Checkout also asks for a business bank account for ACH debits, a tax identification number, a Social Security number or individual taxpayer identification number, and a color photo of a government-issued ID. Those bank details matter later: according to the complaint, when Toast adds new subscriptions to an account, it draws payment from the bank account already on file.

The early termination fee

The largest hidden charge alleged in the complaint is the early termination fee. Restaurants that cancel after the 120-day window, according to the plaintiffs, must pay $150 per month for every month left on the contract, "no matter how long they've been processing payments with Toast at the higher rate ostensibly to cover hardware and subscription costs." The complaint says this term appears neither in the scroll box nor in the checkout disclosures. Finding it requires clicking the "Merchant Agreement" link, which buyers are not required to open, and reading to Section 8.4 on page 12 of 25, a section with no heading.

There is a tension in the exhibits on this point. The same Exhibit 8 checkout screen contains a paragraph, beginning "By choosing Toast's Pay-As-You-Go Plan," that ends: "This paragraph overrides any reference to an Early Termination Fee for Merchants with a Pay-As-You-Go subscription in the Toast Merchant Agreement. Pay-As-You-Go customers are not subject to a monthly fee for early termination." The complaint does not say when that screenshot was captured or explain how the line squares with its allegation that Pay-as-you-Go customers pay $150 a month to leave. The FTC's release repeats the $150 allegation without qualification.

The complaint's examples of termination charges are not limited to Pay-as-you-Go accounts. One restaurant owner told the FTC he was charged a $5,318.87 early termination fee, which Toast refused to refund, when he cancelled after four years. Another cancelled before receiving any equipment or using any software and received an invoice for $17,030.74, set to be drafted automatically from the business bank account. A third said the system failed on its first day, the restaurant stopped using it, and six months later, in February 2024, Toast withdrew $4,361.68 by ACH "without any prior notice, invoice, contract explanation, or authorization." A fourth, who left within 60 days, said it paid a $4,630.09 termination charge on October 14, 2024, was billed $49 a month for three to four months afterwards, and then had the same $4,630.09 debited again on February 12, 2025.

According to the complaint, Toast also gives support agents a script that uses the termination fee as an argument against cancelling. The script's wording is redacted.

"24/7/365" support

The customer support allegations target marketing copy directly. According to the complaint, "nearly every page" of Toast's website carries some version of the round-the-clock promise. Examples cited include "Real people with real solutions, here when you need them," "Connect with real people who really get restaurants, 24/7," "24/7 support - you work industry hours, and so do we," and a payments page promising "Customer Care available 365/24/7 to troubleshoot any issue in your restaurant." Each subscription package in the sign-up flow lists "24/7/365 support" as a feature. More than 600,000 unique visitors to Toast's website have viewed the claim, according to the complaint.

The plaintiffs say Toast knew the claim mattered to buyers. The complaint cites customer surveys in 2021 and 2025, market strategy research in 2022, a July 2024 survey of small and medium restaurants that were not Toast customers, interviews with cancelled customers in March 2025 and an internal document from April 2025. Almost all of the findings are redacted. One unredacted detail: a 2022 survey of all customers included those who had never contacted support, and Toast "did not try to determine" what the results would show if only customers who had used support were counted. In December 2024, according to the complaint, Toast continued to direct its sales representatives to promote its customer support to prospective clients.

Several of Toast's teams, the complaint alleges, are not available around the clock at all. The cancellation line and the Toast Capital care team take calls only during limited business hours. The tax team has "blackout" periods each quarter during which it does not respond to customers. One Toast employee wrote in an internal chat: "I've got a customer that's been waiting almost the entire month of July because they won't even address it until their Blackout is over." On March 15, 2023, another employee flagged a tax case sent to the tax team on February 24, warning that the customer might be unable to obtain her liquor license if it was not handled. In the same thread, according to the complaint, an employee noted that a state had held a hearing on revoking a restaurant's certificate of registration because Toast had not filed its taxes on time.

The customer complaints quoted in the filing describe cases closed without resolution, escalations that went nowhere and support moved offsite. One restaurant owner wrote that "Toast has moved the majority of customer support to an inadequate, third party company. The IBEX offsite team continuously closes cases without offering any resolution." Another said: "I have called them atleast [sic] 50 times to resolve this and each time i [sic] talk to them they tell me its [sic] in process and will be solved in 2 weeks time frame." One owner called on a Saturday with an urgent problem and was told the only team that could help was closed at weekends, which cost the business "thousands of dollars in credit card transactions," according to the complaint.

The 99-cent fee that went to Toast

The allegation that reaches furthest beyond the restaurant industry involves diners, not restaurants. Beginning at certain locations around September 2021 and rolled out to all Toast restaurants by at least June 2023, according to the complaint, Toast charged restaurant patrons 99 cents on every online order over $10 placed through Toast's digital ordering channels. None of the money went to the restaurant. It was charged on top of what restaurants already paid Toast for the online ordering add-on and for payment processing, and restaurants could not opt out of it or control how it was shown.

How the fee was presented changed over time. Toast tested it in 14 markets between the third quarter of 2021 and the first quarter of 2023, according to the complaint. In late 2021 it appeared as a separate "service charges" line, and a tooltip identified it as a "Toast Online Ordering Fee" that "help[] us operate our platform." Restaurants objected through 2022. One wrote: "Stop charging my guests a service fee effective IMMEDIATELY and refund the service fees you charged to my guests cards." A bagel shop owner said there was "no way a small Bagel Shop like us can raise an item a $1 then also have our customer pay an additional .99 service charge."

By 2023, Toast had renamed the charge an "Order Processing Fee" and moved it inside the existing "Taxes & Fees" line on the order, where it showed up only if a diner clicked a small tooltip. The tooltip said the fee was "Set by Toast to help provide affordable digital ordering services for local restaurants." According to the complaint, nothing in that wording told diners that Toast, not the restaurant, kept the money.

Restaurants were told about the change in a notice announcing that they would be "upgraded to the next generation of digital ordering." The notice led with new branding, marketing and ordering-channel features, including Order with Google. The fifth bullet read: "$0.99 Order Processing Fee paid by guests on orders $10 and above to keep your digital ordering costs low." Restaurants could start customizing fonts, colors and images from April 6, 2023, and the customizations, "in addition to a guest facing Order Processing Fee," would switch on automatically on April 17, 2023. The complaint says a restaurant saw the fee only if it clicked "Next" rather than closing the first screen, then scrolled to the last bullet in the middle of the second. The notice's own wording ("$10 and above") and the complaint's ("greater than $10") differ slightly on the threshold.

In May 2023, Toast created an internal document to track restaurant complaints about the fee, according to the plaintiffs. One of the top concerns was that Toast needed to "[d]isclose that the order processing fee is coming from Toast. Right now it is hidden behind the question mark." Toast launched the fee across its customer base in June 2023 "without further changes," the complaint says. Restaurant reaction was blunt. "It is the definition of a junk fee!!...This fee is completely absurd and not in the contracts we signed with Toast," one wrote. Another: "Customers think WE have added the fee. This is deceptive and a huge money grab for toast and puts restaurants in the position of having to explain YOUR fee that we had no voice in implementing."

Toast rolled the fee back in late July 2023 after criticism from restaurants and industry observers, according to the complaint, but has not refunded any of it. How much Toast earned from the fee is redacted. So is the share of diners who, according to a 2024 internal research presentation, said they would not leave a tip if fees were added to their order. The Oklahoma counts ask the court to order restitution to Oklahoma restaurants and to the patrons who paid the fee.

Charges restaurants say they never approved

Toast subscriptions start at about $90 per location per month, according to the complaint, and rise with the number of terminals and add-ons. Examples include Toast Kiosk for guest self-service ordering at $100 per device per month, Toast Kitchen Display Systems at $35 per device per month, and payroll services covering timekeeping, payroll processing and payroll tax filing. The average monthly spend per customer is redacted.

Restaurants can sign up through the self-service flow, through a sales demo followed by an order form and "Merchant Application" signed on DocuSign with bank details and a voided check, or, since around January 2025, through a "Quote Builder" link sent by an online sales representative. All three routes end in an online sign-up that activates the subscription.

According to the complaint, Toast customers "frequently complain" of being enrolled in and billed for add-ons without consent. One wrote that they "explicitly did not opt-in to these services when they were first introduced... yet we have been billed for them for an extended period." Internally, Toast uses "downsell" for a customer dropping an add-on and churn for a customer cancelling entirely. In March 2024, one employee described the pattern: "They may have discovered that they are paying for Email Marketing - tell us that they don't use it and they shouldn't be paying for it - request to turn it off, and then we keep billing them for Email Marketing for months."

How cancellation works, according to the complaint

Toast subscriptions renew automatically for successive one- or two-year terms. Restaurants can sign up online but cannot cancel online. To stop renewal, a restaurant must send written notice of its "intent not to renew" at least 30 days before the end of its term. The complaint says this requirement sits in Section 8.1 of the Merchant Agreement, on page 11 of 25, on the eleventh line of a 17-line paragraph.

What happens next, as the complaint describes it, involves several teams:

  • Restaurants that get a reply to their written notice are told to call Customer Care or use live chat. Internal scripts instruct representatives to ask "probing questions" and to "de-escalate the situation."
  • Customer Care cannot process a cancellation. Restaurants must be transferred to a separate cancellation line, known internally as the "churn line," which has no public number and operates only on weekdays between 9am and 5pm Eastern. Callers outside those hours are told to wait for a callback, which many say never comes.
  • The churn line sends an "Account Deactivation form" or points the restaurant to it on Toast Central. Restaurants must stay on the phone while completing it, a process representatives are told to describe as taking about 15 minutes. Those who cannot stay on the line cannot proceed.
  • The completed form then goes to an "Account Operations" team, which processes it in Salesforce. The cancellation takes effect only on the date it is processed.

Some restaurants report being made to schedule a meeting with a "cancellation specialist" first. One owner who had already moved to a different point-of-sale system said Toast required a 30-minute call with both owners, that the account was due to renew on July 25, and that the first available meeting was July 29.

Payroll customers face a second process on top of the first. They must email notice at least 90 days before the end of the payroll term, after which the Payroll Care Team opens a case in Salesforce and the Account Operations team sends a separate "Payroll Deactivation Form." One restaurant told the FTC that it cancelled before going live with Toast, switched to a competitor, and was still being charged for payroll almost a year later.

Starting in March 2025, Toast began rolling out an online "Subscriptions Hub" through which some customers can request removal of individual add-ons. Those requests still need approval from the Account Operations team, and the complaint says no Toast customer can cancel a core subscription online by any method.

Loans as a switching cost

Toast launched Toast Capital in 2019 to lend to its own customers. According to the complaint, loan holders are barred from changing point-of-sale provider without Toast Capital's advance permission, which it can withhold "in its sole discretion." Cancelling or switching without that permission is treated as an "Event of Default," which makes the outstanding balance due immediately. The plaintiffs say this restriction is not disclosed at any point in the loan application, and that it leaves borrowers choosing between paying for a subscription they no longer want and facing accelerated repayment on top of any termination fee.

Toast's response and the ROSCA question

Toast responded in a statement distributed on Business Wire and posted on its investor relations site on October 29. According to Toast, it strongly disagrees with the allegations and will vigorously defend itself. The company said the FTC is trying to apply ROSCA, a law Congress passed to address certain online subscription practices, to Toast's commercial agreements with its restaurant customers, and that no court has held ROSCA applies to negotiated business-to-business agreements. Applying it that way, Toast said, could rewrite the law of commercial contracts and disrupt business-to-business providers across the economy, resulting in less competitive terms and more harm to small businesses.

Toast also said it has cooperated fully with the FTC's review since mid-2025, as disclosed in its last quarterly filing, including efforts to resolve the matter without litigation, and that the FTC disregarded information showing how far its restaurant customers negotiate their contracts. The company said nothing about the lawsuit changes its customer service, pricing or support. The statement does not address the 99-cent diner fee, the "$0" hardware claims or the "24/7/365" support claims individually.

The ROSCA dispute is not a side issue. ROSCA, which took effect on December 29, 2010, governs goods and services sold online through a negative option feature, meaning an arrangement in which a customer's silence or failure to cancel is treated as consent to keep paying. It requires sellers to disclose all material terms clearly before taking billing information, to obtain express informed consent before charging, and to provide "simple mechanisms" to stop recurring charges. Counts IV, V and VI of the complaint, brought by all plaintiffs, allege that Toast failed on all three.

The complaint uses the word "consumers" throughout to describe restaurants, while also describing them as "small business owners who, operating with limited staff, constrained resources, and minimal margins, depend on reliable point-of-sale systems." Is a restaurant owner clicking through a 25-page merchant agreement online a consumer buying a subscription, or a business signing a commercial contract? Toast's position is the second.

The stakes of that argument are financial as well as legal. Under Section 5 of ROSCA, as paragraph 128 of the complaint notes, a ROSCA violation is treated as a violation of an FTC trade regulation rule. That brings in Section 19 of the FTC Act, which the complaint cites as a basis for monetary relief. Since the Supreme Court's April 2021 decision in AMG Capital Management v. FTC, Section 13(b) on its own has not supported monetary awards, which makes rule-based claims such as ROSCA the FTC's main route to redress in federal court. ROSCA also gives state attorneys general a direct right to sue for injunctive relief, which is how the eight states join the federal counts.

Not every claim depends on ROSCA, however. Counts I to III are brought under Section 5 of the FTC Act and allege that the "$0" hardware claim and the "24/7/365" support claim are deceptive and that charging fees without express, informed consent is unfair. The state law counts, which run through Count XXI, also stand on their own statutes.

What the plaintiffs want

The complaint asks the court for a permanent injunction against further violations of the FTC Act, ROSCA and the state laws, monetary relief, and civil penalties, damages, restitution and fees for the states. The state statutes set out specific penalty levels:

  • Florida: $10,000 per willful violation, rising to $15,000 per violation involving a senior citizen.
  • Illinois: up to $50,000, or up to $50,000 per violation if the court finds intent to defraud.
  • Oklahoma: $10,000 per violation, plus restitution to Oklahoma restaurants and to patrons who paid the 99-cent fee, and disgorgement of revenues obtained from Oklahoma consumers.
  • Utah: the greater of actual damages or $2,000 per act or practice, plus a civil penalty of $2,000 per act or practice.

Utah's attorney general gave Toast a 10-day notice to correct on September 11, 2026, a step Utah law requires before an action for injunctive relief, according to the complaint.

Why this matters for the marketing community

Two of the core claims in the case are advertising claims. "$0" and "24/7/365" appeared on landing pages, in pricing tables and in the sign-up flow, and the complaint's theory is that a footnote six scrolls down does not cure a headline price, and that a support promise on nearly every page is a factual claim that has to be true. This is the same terrain as "free" claims. In March 2026, the Fifth Circuit set aside the FTC's in-house order against Intuit over TurboTax "free" advertising, holding that the agency could not adjudicate such deceptive-advertising claims in its own administrative courts. The Toast case was filed directly in federal district court.

The case also adds to a run of FTC actions over fees and subscriptions that PPC Land has followed. Instacart agreed to pay $60 million on December 18, 2025 over "free delivery" claims alongside mandatory service fees of up to 15% and Instacart+ sign-ups. On January 13, 2026, the FTC sued JustAnswer under ROSCA, also in the Northern District of California, over $1 or $5 trial offers that rolled into monthly fees of $28 to $125. On July 2, 2026, Hopper agreed to pay $35 million over pre-selected support and tip fees added to bookings despite a "no hidden fees" promise. Earlier, in June 2024, the FTC sued Adobe under ROSCA over an early termination fee of up to 50% of remaining payments on its "annual paid monthly" plan, a structure that resembles the Toast allegations.

What sets the Toast case apart is the customer. Instacart, JustAnswer and Hopper sold to individuals. Toast sells to restaurants. That puts it closer to the case the FTC and 22 states filed against Amazon on August 31, 2026 over about $20 billion in alleged hidden ad surcharges, in which the alleged victims were advertisers, more than 500,000 of them small businesses. Two multistate actions in two months have now centered on fees charged to businesses rather than shoppers.

The ROSCA route matters more because the FTC no longer has its broader subscription rule. The agency finalized its "Click to Cancel" rule on October 16, 2024, requiring cancellation to be as easy as sign-up. Industry groups including the IAB challenged it within days, and the Eighth Circuit vacated it on July 8, 2025, six days before the compliance date. The FTC issued an advance notice on March 11, 2026 to restart the process, with comments closing on April 13. Until a new rule exists, ROSCA's "simple mechanisms" requirement, a 2010 statute, is the federal tool for cancellation cases, and the Toast complaint tests whether it reaches business accounts.

If the court accepts the FTC's reading, the effect would extend well beyond restaurants. A large share of the software sold to small advertisers and merchants, from ad management tools to email marketing, ordering and loyalty platforms, is sold online on auto-renewing terms with cancellation by notice. If Toast's reading prevails, those contracts stay governed mainly by contract law and the general prohibition on deception in Section 5.

For restaurant marketers, the 99-cent fee raises a separate issue: who controls the price a diner sees in a merchant's own ordering channel. Point-of-sale vendors increasingly sit between restaurants and their customers' data. DoorDash, for instance, said on September 30, 2026 that it plans to extend its loyalty and guest-profile tools to more than 80,000 restaurants running on third-party point-of-sale systems from 2027. The complaint's account of a platform adding its own fee to a restaurant's checkout, labelling it in a way that diners attributed to the restaurant, and refusing to let the restaurant switch it off, describes a risk that any merchant relying on a third party's ordering layer carries.

Timeline

Summary

Who: The Federal Trade Commission, the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah, and the People of the State of California through the Los Angeles County Counsel and San Francisco City Attorney, against Toast, Inc. and four subsidiaries: Toast Processing Services, Stratex HoldCo, Strategy Execution Partners and xtraCHEF.

What: A lawsuit alleging that Toast advertised "$0" hardware and "24/7/365" support that restaurants did not receive, charged undisclosed fees including a $150-per-remaining-month early termination fee and an $85 monthly charge, billed for add-ons without consent, made cancellation a multi-team process with a weekday-only phone line, used loan default terms to discourage switching, and collected a 99-cent fee from diners on online orders between September 2021 and late July 2023 without refunding it. Toast denies the allegations and argues ROSCA does not apply to negotiated business contracts.

When: The complaint was filed and the FTC announced the case on October 29, 2026. Toast responded the same day.

Where: The US District Court for the Northern District of California, San Francisco Division, case 3:26-cv-12705. Toast is headquartered in Boston and has offices in eight countries, according to the complaint.

Why: The plaintiffs say Toast's practices drained small restaurants' margins and misled diners, and they seek a permanent injunction, monetary relief and state civil penalties. For marketers, the case tests whether federal subscription law reaches business-to-business software contracts, and it is the latest in a series of FTC actions treating headline prices such as "$0" and "free" as claims that fees and fine print cannot contradict.