Tesla has been ordered to refund US$10,600, plus arbitration costs, to a Model Y owner in Washington state after failing to deliver on the promise of its Full Self-Driving (FSD) feature.
The case was brought by veteran arbitration lawyer Marc Dobin, who purchased a 2021 Model Y for his wife in hopes that FSD would provide her with greater independence as her mobility declined, paid an additional $10,000 for the FSD option. But despite the purchase, Tesla withheld access to FSD, requiring owners to achieve a high “Safety Score” based on undisclosed criteria. Dobin said this requirement was not disclosed at the time of purchase and became a central issue in his case.
After Tesla failed to respond to Dobin’s written demand for a refund—a contractual prerequisite before arbitration—he filed a claim with the American Arbitration Association (AAA). Tesla initially delayed the case by missing deadlines and failing to pay required arbitration fees. Once proceedings moved forward, Tesla produced just one witness: a service technician with limited knowledge of the FSD system, who admitted he had not reviewed Dobin’s contract or driving logs.
The arbitration hearing revealed that Tesla’s use of unreferenced web pages and retroactive Safety Score requirements contradicted the integration clause in the purchase agreement, which limits binding terms to those explicitly referenced in the contract. The arbitrator ruled that Tesla breached the agreement, stating the evidence showed FSD was “not functional, operational, or otherwise available.”
Dobin was awarded a full refund of the FSD fee, plus tax, totaling $10,600. Tesla was also ordered to pay $7,975 in arbitration costs, an amount he has since received from Tesla.
This case sets a notable precedent, especially for consumers who feel trapped by Tesla’s binding arbitration clause. While arbitration is often seen as a barrier to justice, Dobin’s win demonstrates that consumers do have options.
For those who paid for FSD but were denied access due to Tesla’s post-sale requirements or who experienced loss of resale value due to non-transferable features, Dobin recommends contacting Tesla at resolutions@tesla.com. If that fails, arbitration may still offer a path to recourse—with Tesla on the hook for most costs.
As Dobin put it, “Don’t let Tesla’s arbitration clause scare you—you have options,” Dobin wrote in a blog post on his company’s website.
Related Stories:
• France Orders Tesla to End ‘Deceptive’ Self-Driving Claims or Face €50,000 Daily Fines
• Tesla settles with owner who sued over Full Self-Driving (FSD) claims
• FSD Beta to expand to Safety Scores above 80 “in a few days”: Elon Musk
