Tesla Inc. (NASDAQ:TSLA) was forced to reimburse the $10,000 fee charged for its Full Self-Driving or FSD package to a Model Y owner, as well as an additional $7,975 for the arbitration process.
What Happened: Marc Dobin, a lawyer based in Kirkland, Washington, said that Tesla breached the contract under which Dobin purchased the Model Y by not providing him the FSD service even after paying $10,000 extra, the lawyer wrote in a blog post on Monday.
Dobin purchased a 2021 Model Y due to his wife's increasing mobility issues. He purchased the Model Y with the FSD package, which wasn't active at the time. "The promise of a car that could drive my wife around gave us hope that she'd maintain independence as her motor skills declined," he said about the FSD tech.
However, Tesla introduced a "safety score" rating system that rated drivers based on undisclosed parameters before unlocking FSD beta. "This requirement was nowhere in any paperwork related to the purchase," he said in the post before adding that the service remained locked “despite safe driving."
Dobin also said that FSD required driver intervention even when unlocked. "It was clear Tesla's ‘Full Self-Driving’ was nowhere near autonomous," Dobin wrote in the post.
He filed an arbitration after waiting 60 days, as stipulated in the contract. Dobin waited for almost a year before the evidentiary hearing was held via Zoom. Tesla had two lawyers and a sales technician present to defend the $10,000 case.
On June 30, it was ruled that Tesla breached the agreement by "failing to disclose the Safety Score prerequisite" and was ordered to pay $10,600 (FSD + tax) to Dobin.
"The company probably spent far more than our refund defending a clearly indefensible practice," Dobin said.
Why It Matters: The news comes as Tesla's FSD system has been under scrutiny by the authorities for possible traffic violations during last month's Robotaxi launch in Austin.
The company is also facing a wrongful death lawsuit, filed by the estate of the victims, following a 2024 crash in New Jersey involving a Tesla Model S. The plaintiffs claim the crash happened due to the Model S's "defective and unreasonably dangerous design."
In two separate incidents, a Tesla Model 3 was struck by a train as it got stuck on a railroad track and a Tesla Cybertruck was driving in the wrong lane for an extended period. Both incidents posed a danger to the occupants' safety and happened as the vehicles were in "self-driving mode."
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