The Federal Trade Commission and eight states sued Toast Inc. on Thursday, alleging violations of federal and state consumer-protection laws. The case was filed in federal court in California, according to Bloomberg. Toast provides restaurants with software for tasks such as managing inventory, taking orders and accepting payments, Bloomberg reported. The company had more than $6.1 billion in revenue last year, according to the same report.
The complaint alleges problems with how restaurants were enrolled in subscriptions, charged for services and informed about cancellation costs. The states named in QSR Web’s account are California, Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah, QSR Web reported.
Allegations about enrollment, billing and cancellation
QSR Web’s account says regulators challenge Toast’s Pay-as-you-Go plan, alleging that its terms did not clearly disclose a $150 monthly early-termination charge for each month remaining on a contract, as well as hardware return requirements or a charge for the hardware’s full retail price. The account says the complaint cites a customer who allegedly faced a $5,318.87 termination fee after four years with Toast.
The complaint also alleges that Toast charged restaurants 99 cents on certain online orders over $10 from September 2021 through late July 2023, with the fee going to Toast rather than the restaurants, QSR Web reported.
Regulators also challenge disclosures about Toast’s Pay-as-you-Go plan, alleging that its terms did not clearly disclose a $150 monthly early-termination charge for each month remaining on a contract, hardware return requirements or a charge for the hardware’s full retail price. QSR Web’s account says the complaint cites a customer who allegedly faced a $5,318.87 termination fee after four years with Toast. Subscriptions averaged about $900 per month, depending on the number of terminals and add-on services, the publication reported.
What Toast’s materials say
Toast’s support documentation says customers can use a page in Toast Web to review their product, module and device subscriptions, monthly costs and discounts. It directs customers seeking to cancel, remove or change a subscription to a product-removal guide, according to Toast’s support page.
Toast’s terms of service say Section 12 includes mandatory arbitration and a class-action waiver, according to the company’s terms. The terms are company policy; they do not establish the merits of the government’s allegations.
D.C. automatic-renewal disclosure rules
Separately, D.C.’s 2018 automatic-renewal law requires sellers of goods or services to consumers to disclose renewal terms and cancellation procedures clearly and conspicuously, according to the D.C. Law Library. This is local legal background, not evidence that the law applies to Toast’s restaurant-business contracts.
QSR Web reported that Toast had not returned a request for comment by its publication deadline. The allegations have not been proven in court.
