Toast lawsuit puts restaurant subscription terms in focus

The Federal Trade Commission and state and local officials sued Toast and affiliated companies October 29, alleging inadequately disclosed fees, unwanted subscription add-ons and obstacles to cancellation. The case puts a consequential part of buying restaurant technology under scrutiny: what an owner agrees to pay, and what happens when the owner wants to leave.

Toast disputes the allegations and says it will defend itself. The company argues that the Restore Online Shoppers' Confidence Act, or ROSCA, does not apply to its negotiated business-to-business agreements. It says the FTC disregarded evidence of customer negotiations and warns that the agency's approach could leave small businesses with less competitive terms.

The law's relevant provision requires clear disclosure of material terms before collecting billing information, informed consent before charging, and simple ways to stop recurring charges in covered online subscription transactions. Whether it applies here is disputed.

The disagreement reaches from signup to departure. The complaint alleges a cancellation process involving multiple teams and says some customers continued to be charged after giving notice. Toast says it cooperated with the investigation since mid-2025 and tried to resolve the matter before litigation. It says the announcement changes neither its pricing nor its customer service and support.

The cost of getting started, and staying#

An owner comparing systems encounters several prices within one relationship. Toast's current pricing FAQ describes hardware and implementation as upfront costs that vary with the equipment package and installation. Its Pay-as-You-Go option reduces those initial costs through an all-in-one platform rate. Lower spending at installation therefore comes with an ongoing payment arrangement.

The same FAQ says Toast services require approved hardware and describes the company as a payment facilitator working with processors. The terminal, software and card payments are connected parts of the offering, with equipment choices tied to what Toast supports.

Toast's published merchant agreement, last updated September 10, 2025, leaves the initial term to the customer's order. It then renews for one-year periods unless either party gives at least 30 days' written notice before the term ends. These current terms do not establish historical customer disclosures.

Leaving early can carry a termination charge: remaining software subscription fees or, for Pay-as-You-Go, $150 multiplied by the months remaining, plus any applicable software-financing processing fee. Toast can agree otherwise.

The agreement provides exceptions. Specified changes to card-processing rates or the core monthly POS fee allow termination with written notice before the change takes effect, without the standard early termination charge; a software-financing processing fee can still apply. The non-breaching party can terminate for a material breach uncured 30 days after receipt of written notice. Departure costs depend on the reason for ending the agreement.

A loan adds another connection#

For borrowers, the card-payment relationship also supports debt repayment. Toast's Capital loan FAQ says a fixed percentage of daily card transactions processed through Toast goes toward the loan. Busy days produce larger repayments; slower days produce smaller ones.

That flexibility has a deadline. The FAQ lists target terms of 90 to 360 days, depending on eligibility, with a maximum term 60 days beyond the target. The outstanding balance at that final deadline is collected automatically by bank debit.

Some borrowers also face interim minimums. For 270- or 360-day targets accompanied by a repayment milestone schedule, cumulative payments must meet the specified minimum every 30 days. A shortfall may be collected by bank debit. Toast describes the cost as a fixed fee added to principal, regardless of how long repayment takes, with no additional early-repayment fee. Smaller daily deductions do not extend the final deadline or reduce that fee.

The complaint alleges that switching POS providers without advance permission triggers loan default and accelerated loan charges. That connects the financing dispute directly to the question of leaving the subscription.

The case remains pending, with the plaintiffs seeking an injunction and monetary relief.