The FTC Just Sued a Payments Company Over Hidden Fees: What Toast Teaches Every Merchant About Pricing Transparency

A payment fee can be small, recurring and easy to miss. But when its purpose, recipient or cancellation terms are unclear, it can become a significant commercial and regulatory risk.

On 29 October 2026, the US Federal Trade Commission (FTC) and eight states sued restaurant technology and payments company Toast. The case is a reminder for merchants everywhere: payment pricing needs to be clear not only to the business accepting payments, but also to the customer making them.

What the FTC alleges

The lawsuit was filed in the US District Court for the Northern District of California. California and the attorneys general of Colorado, Florida, Illinois, Iowa, Nebraska, Oklahoma and Utah joined the FTC. The complaint alleges violations of the FTC Act, the 2010 Restore Online Shoppers’ Confidence Act (ROSCA), and state consumer protection and unfair or deceptive practices laws. These are allegations, not findings by a court.

The FTC alleges that Toast charged an obscured 99 cent fee on online orders above $10. The company allegedly began testing the fee in September 2021 and collected it from June 2023. According to the complaint, Toast kept the fee rather than passing it to the local restaurant, without making that clear to diners.

The case also concerns subscriptions and charges to restaurant customers. The lawsuit says auto-renewing subscriptions averaged about $900 per month, and alleges that customers were charged for add-on services without authorisation. It also challenges claims of free hardware and “24/7/365” support, alleging that the hardware was never $0 and that customers could not always reach support when promised.

The FTC further alleges that Toast used a nonintuitive, multi-step cancellation process and that some businesses faced unexpected early termination fees. The complaint says at least tens of thousands of consumers raised complaints about the issues.

FTC Bureau of Consumer Protection director Christopher Mufarrige said: “Toast failed to honor a number of its promises and instead imposed hidden fees, unauthorized charges and subscription traps that drained the hard-earned profits of businesses just trying to serve their customers”.

Toast says it disagrees with the allegations and “will vigorously defend” itself. It says it has cooperated fully with the FTC since mid-2025, including efforts to resolve the matter without litigation. Toast also argues that the FTC disregarded information showing that restaurant customers negotiate their contracts, and that no court has found ROSCA applies to negotiated business-to-business agreements. Toast is due to report its third-quarter results on Tuesday.

The FTC’s announcement, Payments Dive’s report and Toast’s response provide the parties’ accounts.

Why the case matters to Australian merchants

The significance is not that an Australian regulator will necessarily take the same approach. This US lawsuit does not predict what Australian authorities will do. Its importance is that it puts the payment provider’s pricing and commercial practices directly under regulatory scrutiny.

That changes the conversation. Merchants have long been advised to disclose fees clearly to their own customers. The Toast case shows the other side of that responsibility: a provider’s pricing, subscriptions, support promises and cancellation arrangements can also draw scrutiny. The result is a two-sided transparency issue, at the provider level and at the merchant’s counter.

Merchants should therefore be able to answer practical questions from their own records: Which charges belong to the provider, which belong to the business, and which are passed on to the customer? What service does each fee pay for? What happens when a subscription renews, a service is cancelled or a contract ends?

For Australian operators with online and in-person sales, the answers may sit across several systems and agreements. That makes a clear, reviewable record especially important. Quantum Payments’ analysis of network choice and merchant fees explores why comparing payment costs requires more than looking at a single headline rate. And fee visibility is relevant across payment methods: our analysis of where costs can still accumulate around faster settlement considers the importance of understanding the whole transaction path.

The RBA benchmark contrast

Australian merchants now have a new reference point. The Reserve Bank of Australia’s merchant payment-costs work publishes average merchant fees for debit, credit and charge cards in its C3 statistical table. The first transparency release went live on 28 October 2026, while most of the broader surcharge and interchange changes took effect on 1 October.

The tables make it possible to compare an acquirer’s quote with a published average. That does not make the average a price guarantee or a like-for-like quote. A merchant’s actual costs will depend on factors including its card mix, sales channels, transaction profile and the services included in the offer.

The benchmark is useful because it gives merchants a more informed starting point for provider discussions. Quantum Payments has covered what the RBA’s first transparency release tells merchants.

Taken together, the Australian data and the US case point to a shared operational priority, not a shared regulatory outcome: merchants should be able to understand and evidence what payment services cost. A public benchmark can help with the provider conversation; the merchant’s own contracts, statements and customer-facing disclosures show how those costs are applied in practice.

A seven-point merchant checklist

Frequently asked questions

Has a court found Toast liable?

No. The FTC and states have filed a lawsuit containing allegations. The case has not yet been decided by a court.

What is the alleged 99 cent fee?

The complaint alleges that Toast charged a 99 cent fee on online orders above $10, kept by Toast rather than local restaurants, and that the fee was not adequately disclosed to consumers.

Does the RBA benchmark show what my business should pay?

No. It provides published average merchant fees for comparison. Your costs depend on your business and transaction profile, so use the figures as a benchmark rather than a guaranteed rate.

What should I check first in my payment agreement?

Start with recurring and additional charges, renewal terms, cancellation steps and early termination fees. Then compare the contract with your invoices, statements and customer-facing disclosures.

The lesson for merchants is not to assume that an average, a contract clause or a checkout disclosure tells the whole story on its own. In 2026, the answer to “what do payments actually cost me?” needs to be documented, sourced and reviewable on both sides of the counter.