On October 29, 2026, the Federal Trade Commission and eight co-plaintiffs filed a complaint against restaurant software company Toast Inc. in the U.S. District Court for the Northern District of California. Everything below describes allegations in that complaint, which Toast has not been found liable for and which no court has ruled on.
According to the FTC’s announcement, the complaint alleges hidden and unauthorized fees, unwanted subscription add-ons, a difficult cancellation process, and misleading round-the-clock support claims. It cites the FTC Act, the Restore Online Shoppers’ Confidence Act (ROSCA), and related state laws. The Commission voted 2-0 to authorize it. Nothing in the filing changes the law, but it is a detailed list of what regulators now expect a business’s terms to say up front.
Source: Colorado Attorney General, captured October 31, 2026.
Who filed and what they allege
The plaintiffs are the FTC, the People of the State of California (through the Los Angeles County Counsel and the San Francisco City Attorney), and the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma, and Utah. Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, said restaurants “deserve tools and services that are transparent, reliable and truthful,” and that “These practices are illegal.” Toast has not been adjudicated to have done anything wrong, and the quote reflects the agency’s position, not a finding.
The FTC’s press release describes several specific practices the complaint alleges. One customer who canceled after four years was allegedly charged an early termination fee of $5,318.87. The complaint alleges an early termination fee of $150 for each remaining month of the contract. It alleges a customer who wanted to leave had to give 30 days of written notice of intent not to renew. It alleges that customers who had not started processing payments within 120 days had to return hardware or pay its full retail value. It alleges an $85 monthly processing charge for restaurants forced to close temporarily, and add-ons billed without clear consent. It also alleges a $0.99 fee added to certain online orders over $10 between September 2021 and late July 2023.
FTC, FTC and States Take Action Against Toast Inc. Over Hidden, Unauthorized Fees and Deceptive Subscription Practices is the primary source for every figure in this post. The complaint itself is the controlling document, and readers who need the exact allegations should read it rather than rely on our summary.
Why the early termination fee is the number to study
Most of the dollar amounts above are small next to the termination fee, and the termination fee is the one that scales with time. If a fee of $150 per remaining month applies, the amount owed depends entirely on when the customer decides to leave. The chart below is simple arithmetic on the alleged $150 figure, not a number from the complaint. It shows how quickly such a clause grows, and why a customer who first reads it at cancellation time can feel ambushed.
Figure: Illustrative early termination fee at the alleged $150 per remaining month. Multiplication by the authors; only the $150 rate comes from the FTC’s announcement.
A per-month fee is not unlawful on its face. The risk lies in how it is presented. A clause that appears only in a long master agreement, or in a link the customer never had to open, is the type of term regulators describe as hidden. Our guide to auto-renewal and negative option disclosure requirements covers the standard disclosure elements, and the same logic applies whether the buyer is a consumer or a small business.
What clear disclosure looks like
The table below sets each alleged practice beside the kind of disclosure that would let a customer understand the term before agreeing to it. It is a drafting aid, not a statement of what Toast did or did not disclose.
| Alleged practice | What a clear disclosure looks like |
|---|---|
| Early termination fee of $150 per remaining month | State the formula, give a worked example, and show it next to the sign-up button |
| 30 days of written notice of intent not to renew | State the notice window, the accepted method, and the renewal date in the order summary |
| Hardware returned or paid for at full retail value after 120 days without processing | State the deadline and the dollar consequence in plain words at checkout |
| $85 monthly processing charge during a temporary closure | List every recurring minimum or fee, including ones that apply only in special circumstances |
| Add-ons billed without clear consent | Require a separate, affirmative opt-in for each paid add-on |
| $0.99 fee on certain online orders over $10 | Show the fee before the end customer confirms the order |
B2B contracts are not a safe harbor
It is easy to read a case about restaurant software and conclude that it only concerns business-to-business deals, where buyers are assumed to be sophisticated. According to the FTC’s announcement, the plaintiffs are using both federal and state law, including ROSCA, to challenge how business customers were enrolled and billed. Small merchants often sign the same kind of click-through terms that consumers do, so it is prudent to write those terms as if the reader were a consumer.
In practice, a business that sells to other businesses should apply the same discipline it would apply to a consumer subscription. Put the renewal term, the notice window, and any termination charge in the checkout flow, not only in a downloadable PDF. Describe optional add-ons as optional and obtain a separate yes for each. If a fee changes when a customer pauses or closes temporarily, say so in the pricing section. Our coverage of related enforcement, including the StubHub drip pricing settlement, points the same direction on price transparency, and the New York City click-to-cancel rule shows local governments moving on cancellation ease at the same time.
State rules on termination charges also vary. If you serve California customers, read our explainer on the California AB 483 early termination fee cap before relying on a flat per-month formula.
What to check in your own terms this week
Start with the renewal clause. Confirm that it names the renewal term, the notice deadline, and the way notice must be given, and that the same facts appear at the point of purchase. Then read your termination clause the way a customer would on the day they want to leave: can they calculate what they will owe without contacting you? Finally, review every automatic charge, including minimums, closure fees, and add-ons, and confirm each one is either disclosed up front or consented to separately.
None of this requires a rewrite from scratch. A common fix is moving the three or four terms that cost customers money out of the body of the agreement and into a short summary shown before purchase.
Bottom Line
The Toast complaint is an allegation, not a ruling, but the list of practices it names is a checklist any subscription business can run against its own agreement: renewal notice windows, termination fees, hardware obligations, recurring charges, and add-on consent. If any of those live only in the fine print, move them to the point of sale. Our Terms and Conditions Generator builds an agreement with clear renewal, cancellation, and fee sections you can adapt to your own billing practices.
Sources
The information in this article is for informational purposes only and should not be construed as legal advice on any matter, and does not create a lawyer-client relationship.
