FTC and State Officials Sue Toast Over Hidden Fees

The Federal Trade Commission and a coalition of state and local officials filed a lawsuit against restaurant technology provider Toast in the U.S. District Court for the Northern District of California. The regulators allege that Toast violated the FTC Act and the Restore Online Shoppers' Confidence Act by imposing hidden fees, unauthorized charges, and subscription traps that made cancellations difficult for business owners.

Specific allegations include enrolling customers in payroll and timekeeping add-ons without their consent and failing to disclose early termination fees within the company's Pay-as-you-Go plan. The complaint further claims Toast diverted a 99-cent fee from online orders to itself instead of the restaurants and failed to provide the 24/7 customer support it advertised. Additionally, the lawsuit asserts that canceling subscriptions could trigger the immediate repayment of Toast Capital loans.

Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection, stated that Toast failed to honor its promises and instead used these tactics to drain the profits of businesses. The legal action includes officials from California, Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma, and Utah.