Toast says it will fight an FTC lawsuit over fees and cancellations. Restaurant and shop owners who use its systems may want to review their own contracts.
Toast, a company that makes software and payment tools for restaurants and shops, says it will fight a federal lawsuit. CEO Aman Narang said on Tuesday, Nov. 3, that the suit will not change the company's plans. He spoke during its third quarter earnings call.
The Federal Trade Commission (FTC) and state authorities filed the suit on Oct. 29. They accuse Toast of adding unauthorized charges, misleading businesses about pricing and making it hard to cancel services. Toast says it disagrees and will defend itself.
Toast argues that the law the FTC is using, the Restore Online Shoppers' Confidence Act, does not apply to negotiated business-to-business contracts. Narang said that if it did, it would have big effects across the industry.
He also pointed to growth as a sign customers are happy. Toast added about 8,500 net new locations in the quarter, for a total of about 189,000. Its yearly recurring revenue rate rose 24% to $2.5 billion as of Sept. 30.
The material does not say how the case will proceed, when a court might act or what penalties the FTC seeks. The claims are allegations, and Toast denies them. For owners who use Toast or similar vendors, the practical step is to read contracts closely for extra fees and cancellation terms.
Before you sign or renew a tech contract, check it for extra fees and for how hard it is to cancel.
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