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Published by J9 Systems. What's new in business tech, and what it means for yours.

From the brief of Friday, October 30, 2026 · No. 17

From the daily brief · Vendors

FTC and eight states sue Toast over $150-a-month exit fees and hidden add-ons

The alleged tactics, including buried renewal notices, per-month exit fees and loans that come due if you leave, show up in a lot of business software contracts.

By Carter Josephson · · 2 min read

What happened

On Oct. 29, 2026, the FTC, the attorneys general of seven states and California (through the Los Angeles County Counsel and San Francisco City Attorney) sued restaurant point-of-sale company Toast Inc. in federal court in Northern California, alleging hidden and unauthorized fees, unwanted add-ons, false "24/7/365" support claims and a hard-to-cancel subscription process. The complaint cites an undisclosed early termination fee of $150 for each remaining contract month, a 30-day written notice requirement to stop auto-renewal that was not clearly disclosed at sign-up, and Toast Capital loans that come due in full if a customer cancels.

What it means for a 10-to-50-person business

Toast sells to restaurants, so most readers don't use it. The reason to care is that the alleged tactics are common across business software, including field-service, payments and payroll tools. They include auto-renewing multi-year terms, notice windows buried in sign-up, per-month exit fees, add-ons switched on without asking, and financing that comes due if you leave.

Take a 15-person plumbing shop that pays an assumed $600 a month on a two-year field-service contract signed eight months ago. If that contract has a Toast-style fee of $150 per remaining month, switching now costs $2,400. If it also requires 30 days' written notice before renewal and the owner misses it, another $7,200 year is locked in. If the shop took vendor financing tied to the account, the whole balance could come due on cancellation.

These are allegations, not findings. The court decides. Owners whose tools are all month-to-month and cancellable online can ignore this. Anyone with annual or multi-year software contracts should find out exactly how each one ends.

What to do
Ask your vendor

Email each software vendor you pay more than $100 a month and ask, in writing, for your renewal date, the notice period and method required to cancel, any early termination fee, and whether any financing or payments balance comes due if you leave.

What it costs
What it costs
Contract audit, assume 12 subscriptions × 15 min each
3 hrs (≈ $150 at $50/hr)
Missed 30-day non-renewal notice, assume $600/mo tool on annual term
$7,200 for another year
Toast-style exit fee, $150 × 16 remaining months
$2,400
Vendor loan tied to the subscription
full balance due on cancellation, if your contract works like the one alleged
Doing nothing
$0 now; the risk is a surprise renewal or exit fee the next time you try to switch
Sources
ftc.gov (primary) · FTC: Restore Online Shoppers' Confidence Act · Report bad business practices to the FTC

Questions owners ask

Has a court found that Toast broke the law?

No. The FTC files a complaint when it has reason to believe the law is being violated. The Commission voted 2-0 to file, and the case will be decided in the U.S. District Court for the Northern District of California.

Why does a lawsuit about restaurant software matter to a trades or services business?

The case targets practices that are common in business software contracts: auto-renewal with buried notice windows, per-month early termination fees, add-ons billed without clear consent, and embedded loans that accelerate if you cancel. The FTC is bringing these claims on behalf of small businesses, not just consumers.

What should I write down from each vendor's answer?

Write down the renewal date and the date your notice must arrive by. Record the required notice method (email, letter, portal), the exit fee formula, and any loan or financing terms tied to the account. Put the notice deadline on your calendar 45 days ahead.

Three to five of these, every weekday morning.

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