FTC and eight states sue Toast over hidden fees, taking aim at a $6 billion payments machine
The FTC and eight states say Toast's "$0 a month" hardware plan buries the bill in payment-processing fees and exit penalties; Toast says a consumer statute does not reach business contracts, and the argument decides the shape of a $6 billion revenue machine.
Vincent Jiang · 3 min read
A restaurant paid $5,318.87 to leave
The Federal Trade Commission, the attorneys general of seven states, Los Angeles County and San Francisco sued Toast+7.18% — Toast, up 7.18 percent today in federal court in Northern California on October 29, 2026 1. The complaint says a restaurant that cancels early owes $150 for every month left on an auto-renewing contract that averages about $900 a month, a formula it says owners never saw at sign-up; one owner was billed $5,318.87 to exit after four years and was refused a refund 1.
The suit also alleges Toast enrolls restaurants in add-ons such as payroll and timekeeping they never ordered, buries cancellation behind 30-day written notice and a multi-department process, and advertises 24/7 support that owners could not reach for weeks or months 23.
The suit aims at the revenue engine, not one fee
Nearly 200,000 business locations run on Toast's technology, and the company earned more than $6 billion in 2025, with more than 80% of it from financial services: payment processing and Toast Capital loans 2. That mix is why cancellation sits at the center of the case. Leaving, per the complaint, triggers the per-month fee, and for a restaurant carrying a Toast Capital loan it counts as a default that makes the full balance due immediately 1. Revenue has kept climbing straight through the quarters the FTC was investigating.
Toast's quarterly revenue kept climbing straight through the FTC investigation
Data
| Revenue, USD billions | |
|---|---|
| Q1 '24 | $1.08B |
| Q2 '24 | $1.24B |
| Q3 '24 | $1.31B |
| Q4 '24 | $1.34B |
| Q1 '25 | $1.34B |
| Q2 '25 | $1.55B |
| Q3 '25 | $1.63B |
| Q4 '25 | $1.63B |
| Q1 '26 | $1.63B |
| Q2 '26 | $1.91B |
$0 a month, and the cost in the spread
The complaint attacks the Pay-as-you-Go plan marketed to one- and two-terminal restaurants: hardware and software at $0 a month, the true cost sitting in higher payment-processing fees, and the $0 covering only one terminal even where two are advertised 2. It also revives the 99-cent online-ordering fee Toast charged diners from September 2021 to June 2023, never disclosed in restaurant contracts, removed after a backlash and never reimbursed 2. The Iowa attorney general says thousands of complaints reached the FTC, the internet and Toast itself before anyone filed 3.
Toast's answer is a statute fight
Toast says it negotiated with the FTC from mid-2025 and lost only when the agency went to court, and that the Restore Online Shoppers' Confidence Act, a consumer statute, has never been held by any court to apply to negotiated business-to-business contracts 42. That is the whole case in one question: whether a consumer-subscription law reaches a signed restaurant contract. TOST fell 1.2% on filing day and closed the week above where it started 45.
What decides it next
If a court accepts the FTC's reading, the free-hardware pricing that payments platforms use to buy their way onto the counter becomes legally exposed industry-wide, and fee disclosure stops being fine print. If Toast wins, regulators will need a different statute to reach B2B subscriptions.
The complaint seeks an injunction, monetary damages and civil penalties, and no dollar figure attaches yet 2. Toast's own latest quarterly report lists resolving regulatory inquiries among its forward-looking risks 1. The readings to watch are Toast's next filings and the earnings call, where quantified exposure, if any, appears first 5.
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