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The restaurant point-of-sale specialist Toast Inc. has been targeted by the Federal Trade Commission and the attorneys general of seven states in a case alleging the company hits its clients with hidden or unauthorized fees and comes up short on the support it promises. The allegations also include a charge that Toast puts up hurdles when clients seek to cancel its services.
The FTC, which began investigating Toast in the summer of 2025, says it has acted in the matter under the Federal Trade Commission Act’s provisions on unfair or deceptive practices as well as under the Restore Online Shoppers’ Confidence Act, which bears in this case on alleged enrollment of customers in ongoing and auto-renewing subscriptions with a difficult cancellation process. President Barack Obama signed ROSCA into law in December 2010.
The commission, along with the attorneys general for Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma, and Utah filed their lawsuit against Toast in the U.S. District Court for the Northern District of California. The complaint also includes Los Angeles County and the city of San Francisco as plaintiffs.
In a response issued Thursday afternoon, the 15-year-old, Boston-based company says it “strongly disagrees” with the FTC’s allegations and will “vigorously defend” itself. Its argument is centered on what it sees as a misapplication of the law. Toast maintains that courts have not applied ROSCA to negotiated business-to-business deals, adding “we don’t believe it applies here.”
Toast also argues it has been cooperating with the FTC’s investigation since the middle of last year, but adds the agency “disregarded the information we provided showing the extent to which our restaurant customers negotiate their contracts.” The POS provider adds it is “prepared to defend our business and fight this unprecedented action through litigation.”
Almost 200,000 business locations use Toast’s technology, according to information in the company’s response. The company reported in August it processed $60.7 billion in payments in the June quarter, a 22% increase year-on-year. Net income that quarter rose 93% to $154 million on $290 million in revenue, up nearly 28%.
The FTC’s action against Toast comes on the heels of its investigation of Block Inc., news of which emerged earlier this month. Block, the parent company for Square and Cash App, froze or de-activated Square accounts holding funds totaling as much as $2.5 million in actions taken since 2022, according to the FTC’s allegations. Block said it is working with the FTC “to bring about the closure of this matter.”
