The lawsuit
The Federal Trade Commission, joined by eight states, alleges Toast broke federal and state consumer protection laws. The case cites the Restore Online Shoppers' Confidence Act, a 2010 statute that requires clear disclosure of key terms before putting consumers on recurring charges.
What the complaint says
According to the filing, Toast pitched its products as free to try, then shifted customers into paid plans that were hard to exit. The FTC says Toast required at least 30 days notice to cancel and did not allow cancellation online. Regulators also say Toast advertised 24/7 support but provided only limited service in practice.
The complaint highlights a 2023 change: a 99-cent fee applied to consumers placing digital orders over $10, on top of the payment processing fees restaurants already pay. The FTC alleges Toast did not clearly disclose that this 99-cent charge went to the company rather than the restaurant.
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Company response
Toast positions its platform as an all-in-one solution for restaurants, covering inventory, ordering, and payments. The company said it will contest the suit and argues the FTC is misusing ROSCA against its commercial contracts with restaurants. In Toast's words, "No court has held that" the Restore Online Shoppers' Confidence Act "applies to negotiated business-to-business agreements, and we don't believe it applies here," Toast said.
Why it matters for investors
Here is what is on the table: regulators say Toast violated consumer protection laws, and Toast counters that ROSCA does not reach negotiated business-to-business agreements. That legal question, plus the detailed allegations around trials, cancellation, support, and the 99-cent fee, frames the uncertainty investors will watch around the case.
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