--- title: "FTC and eight states sue Toast over hidden fees, taking aim at a $6 billion payments machine" description: "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." publisher: "The Inference" section: "Economy" published: 2026-11-02T15:35:21.531Z modified: 2026-11-02T15:35:21.531Z canonical: https://theinference.org/article/ftc-and-eight-states-sue-toast-over-hidden-fees-taking-aim-at-a-6-billion-payments-machine language: en keywords: "Toast, FTC, Payments, Fintech, Regulation" --- # 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. ## 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](https://theinference.org/markets/companies/toast) in federal court in Northern California on October 29, 2026 [1]. [The complaint says](https://www.msn.com/en-us/money/technology/the-ftc-says-toast-charged-restaurants-150-a-month-for-every-month-left-on-a-contract-they-had-cancelled/ar-AA2gtDkX) 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](https://www.nrn.com/restaurant-technology/toast-is-sued-by-the-ftc-over-alleged-hidden-fees-24-7-support-claims) 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 [2][3]. ## 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](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001650164), 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. *Chart: **Toast's quarterly revenue kept climbing straight through the FTC investigation** Line chart of Toast quarterly revenue in billions of dollars, rising from $1.08B in Q1 2024 to $1.91B in Q2 2026.* *Toast's reported quarterly revenue, USD billions, Q1 2024 through Q2 2026, from its SEC filings; the FTC investigated from mid-2025 until filing suit on October 29, 2026. [6]* ## $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](https://cbs2iowa.com/news/local/iowa-attorney-general-sues-toast-alleging-deceptive-practices-hurt-restaurants) [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](https://seekingalpha.com/news/4660664-ftc-sues-toast-alleging-hidden-fees-deceptive-subscription-practices), 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 [4][2]. 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](https://finance.yahoo.com/small-business/articles/toast-tost-fighting-ftc-lawsuit-181132619.html) [4][5]. ## 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](https://theinference.org/article/toast-s-ai-numbers-count-questions-asked-and-november-3-is-where-the-dollars-should-appear), where quantified exposure, if any, appears first [5]. ## Takeaway The FTC and eight states say Toast's $0-a-month hardware plan hides its cost in payment-processing fees and exit penalties; the case turns on whether a consumer subscription law can reach a signed business contract, and the answer could reshape free-hardware pricing across restaurant payments. ## Sources 1. [Morning Overview, The FTC says Toast charged restaurants $150 a month for every month left on a contract they had cancelled, 31 October 2026](https://www.msn.com/en-us/money/technology/the-ftc-says-toast-charged-restaurants-150-a-month-for-every-month-left-on-a-contract-they-had-cancelled/ar-AA2gtDkX) 2. [Nation's Restaurant News, Toast is sued by the FTC over alleged hidden fees, 24/7 support claims, 29 October 2026](https://www.nrn.com/restaurant-technology/toast-is-sued-by-the-ftc-over-alleged-hidden-fees-24-7-support-claims) 3. [KGAN CBS 2 Iowa, Iowa attorney general sues Toast, alleging deceptive practices hurt restaurants, 30 October 2026](https://cbs2iowa.com/news/local/iowa-attorney-general-sues-toast-alleging-deceptive-practices-hurt-restaurants) 4. [Seeking Alpha, FTC sues Toast, alleging hidden fees, deceptive subscription practices, 29 October 2026](https://seekingalpha.com/news/4660664-ftc-sues-toast-alleging-hidden-fees-deceptive-subscription-practices) 5. [Yahoo Finance (Simply Wall St), Toast (TOST) Is Fighting An FTC Lawsuit Over Its Business Contracts, 30 October 2026](https://finance.yahoo.com/small-business/articles/toast-tost-fighting-ftc-lawsuit-181132619.html) 6. [Toast, quarterly figures from its SEC filings, retrieved 2 November 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001650164) --- FTC and eight states sue Toast over hidden fees, taking aim at a $6 billion payments machine — The Inference. Canonical: https://theinference.org/article/ftc-and-eight-states-sue-toast-over-hidden-fees-taking-aim-at-a-6-billion-payments-machine