FTC and seven states sue Boston software firm over hidden costs

The Federal Trade Commission filed a lawsuit against Toast on Thursday.

Seven state attorneys general joined the federal agency in the action.

Los Angeles County also signed on to the legal challenge.

Toast is a software provider based in Boston that serves the restaurant industry.

The 70-page complaint was filed in US District Court in Northern California.

Regulators accuse the company of charging hidden fees and using deceptive practices to stop customers from cancelling.

Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said the company imposed unauthorized charges and subscription traps.

"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," Mufarrige said in a statement.

The lawsuit claims Toast violated the Federal Trade Commission Act and the Restore Online Shoppers’ Confidence Act.

Regulators seek a permanent order to stop these practices and require the company to pay compensation and civil fines.

The complaint states that Toast used false claims to convince consumers to enroll in its subscription services.

According to the filing, the company tells customers their cost is zero and promises customer service 24 hours a day, seven days a week, and 365 days a year. The lawsuit alleges that none of the hardware is free and that customers frequently claim they cannot get support at any hour of the day. The company also allegedly hides order processing fees from restaurants and their customers. When customers attempt to cancel, the lawsuit says Toast makes the process extremely difficult. It also imposes unexpected termination fees. Even after some customers manage to cancel their accounts, the filing says Toast has charged them high-dollar early termination fees or continued to bill them for services without consent. The complaint notes that tens of thousands of consumers have complained about these issues to the FTC, online, and directly to Toast. The practices have continued despite these complaints. The Globe contacted Toast for comment on Friday morning. The case is developing and will be updated as new information becomes available.