FTC and California sue Toast over alleged deceptive practices

The Federal Trade Commission and eight states, including California, have filed a lawsuit against restaurant technology company Toast Inc. The 71-page complaint, filed in the U.S. District Court for the Northern District of California, alleges that the company engaged in deceptive subscription practices and unauthorized billing.

Specific allegations include claiming hardware was available for “$0” when restaurants were ultimately charged, promising “24/7/365” customer support that was reportedly unreachable, and enrolling businesses in unwanted subscriptions. The lawsuit also claims Toast charged restaurants for unrequested add-ons and collected a 99-cent fee from diners on online orders for nearly two years without disclosing to either the diner or the restaurant that the company was retaining the funds.

Toast has stated it strongly disagrees with the allegations and intends to fight the case in court. The company argues that the federal law cited in the complaint was designed for consumer online shopping subscriptions and should not apply to contracts negotiated with businesses. The outcome of the case may determine whether software companies selling auto-renewing services to small businesses must adhere to the same disclosure and cancellation rules as consumer-facing subscriptions.