FTC and eight states sue Toast over hidden fees and subscription traps
The Federal Trade Commission and eight states are suing Toast, the restaurant payments fintech, alleging it imposed hidden and unauthorised fees and signed small businesses up to subscription add-ons without their consent. California, Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah joined the action, which accuses Toast of breaching the FTC Act and the Restore Online Shoppers' Confidence Act, the 2010 law against deceptive online marketing and hidden subscription charges.
Toast sells point-of-sale hardware, software and payment processing to restaurants, and also lends them working capital. The FTC alleges the company failed to deliver on its customer support promises, made cancellation difficult and added unwanted products to bills. "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," said Christopher Mufarrige, director of the FTC's bureau of consumer protection.
Toast said it "strongly disagrees" and will defend itself "vigorously". Its central argument is that ROSCA, written for online consumer subscriptions, does not cover negotiated business-to-business agreements. "No court has held that ROSCA applies to negotiated business-to-business agreements, and we don't believe it applies here," the company said, warning that such a reading could "rewrite the laws of commercial contracts and disrupt business-to-business providers across the economy".
Toast said it had cooperated with the FTC's review since mid-2025 and sought a settlement before litigation, and that the regulator disregarded evidence of how far its restaurant customers negotiate their contracts. The FTC had been investigating for more than a year. ROSCA enforcement is a priority for the commission and state attorneys general; Richard Newman, a partner at law firm Hinch Newman, said the FTC has brought about 50 ROSCA actions, the largest settling at $2.5 billion.
