US Lawsuits Accuse Toast of Hidden Fees and Subscriptions Costing About $900 a Month
Key Facts
The Federal Trade Commission and local officials in California, along with attorneys general from 7 states, sued Toast and its affiliates in October 2026, opening a case pending before the U.S. District Court for the Northern District of California. The complaint accuses the restaurant software and financial services company of imposing hidden and unauthorized fees, adding services customers do not want, failing to deliver on customer support promises and making it difficult to cancel services. The states joining the case are Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah. The commission authorized the filing of the complaint in a 2-0 vote, while the court will decide the allegations. The regulator is seeking monetary relief, a permanent injunction and other measures, but no outcome has been issued yet.
The complaint puts subscription costs at the center of the dispute, saying they average about $900 a month and vary according to the number of point-of-sale devices and additional services bundled into a package. The commission says a term for canceling or not renewing a subscription requires 30 days' written notice and is not clearly disclosed during sign-up. According to the complaint, that means restaurants' obligations extend beyond the advertised monthly price and may include a notice period and termination procedures. The case says these allegations relate directly to the cost of operating systems restaurants rely on to run their businesses. No ruling has established these allegations, which are before the court.
The commission cited a customer complaint saying the customer paid an early termination fee of $5,318.87 after canceling an account following 4 years, and that Toast refused to refund the amount. The complaint also says that changing providers or canceling a subscription while a Toast Capital loan is outstanding may be treated as a breach of the loan, allowing the company to demand immediate repayment of the full remaining balance. These allegations broaden the dispute from subscription fees to the relationship between software services and the financing the company provides to its customers. On support, the commission says Toast advertises assistance available “24 hours a day, every day of the year,” while customers reported difficulty reaching support and resolving problems. The complaint says this support feature appears in subscription packages and challenges whether Toast delivers on it.
The case stems from a civil investigative demand Toast received from the Federal Trade Commission in June 2025, according to the company's quarterly report. The company said commission staff sent it a draft complaint and proposed settlement order in June 2026, after it cooperated with the investigation. In its disclosure, Toast said it “strongly disagrees with the legal challenges” the commission is bringing against its practices, policies and procedures, and is prepared to litigate if necessary. It added that it could not, at this stage, reasonably estimate a potential financial loss. These positions remain part of the case record as the court considers the commission's demands and the allegations in the complaint.
The lawsuit comes as Toast reported revenue of $1.908 billion in the second quarter of 2026, compared with $1.550 billion in the same period of 2025. The number of locations on its platform reached about 180,000 as of June 30, 2026, up 22% year over year, according to the company's results. In August, the company forecast third-quarter adjusted earnings before interest, taxes, depreciation and amortization of between $210 million and $220 million, and non-GAAP gross profit from subscription services and fintech solutions of between $615 million and $625 million. These figures provide broader business context for the case, as the alleged practices concern services used by a large base of restaurants and subscription and financing activities within the company's business. The evidence submitted does not include a court ruling or an estimate of financial losses resulting from the lawsuit.