Legal actions against Toast for alleged deceptive practices

Legal challenges against restaurant management software company Toast began in late October 2026. Initially, the Iowa Attorney General filed a lawsuit alleging the company used false marketing to enroll small businesses in subscriptions. The state claimed Toast promised zero-dollar hardware and constant customer support that was not provided, while also making it difficult to cancel services and hiding various fees.

Following the state action, the Federal Trade Commission and eight states, including California, filed a federal lawsuit in the U.S. District Court for the Northern District of California. This complaint expanded on allegations of deceptive subscription practices and unauthorized billing. Specific claims include charging for hardware marketed as free, providing unreachable customer support, and enrolling businesses in unwanted subscriptions. The federal complaint also alleges Toast collected a 99-cent fee from diners on online orders for nearly two years without disclosing that the company was retaining those funds.

New details in the federal filing describe a complex, multi-step cancellation process that has reportedly caused some customers to incur months or years of unwanted charges. In one instance, early termination fees allegedly exceeded $5,000. The lawsuit further claims Toast enrolled restaurants in services, such as employee timekeeping and payroll processing, without their consent.

Toast has expressed strong disagreement with the allegations and intends to contest the case. The company argues that the federal laws cited are intended for consumer online shopping subscriptions and should not apply to contracts negotiated with businesses.