Anonymous participant 946 Poor attempt at trolling. The OP didn't get his name wrong (read what he has stated). The 'warning' to which you refer translates in this case as; 'we have poor software developers'. You say 'an embassy official has noticed'. They don't, applications with a name 'mismatch' are cancelled before they see them. You really need to try harder next time.
You forget that the embassy might actually agree with the applicant that the process they've been instructed to follow is unfair. Are there any instances of anyone who has instigated a chargeback suffering as a result? If I was a true digital nomad with no ties to Thailand I wouldn't give them the opportunity to do that to me again. I would explore other options including going to alternative warm and economical destinations.
Government departments are full of themselves the world over. Doesn't matter what they write on their websites. In accepting fees they have a duty to deliver their service. Where they fail to do so we have recourse to our banks/credit card companies who will determine whether we have had a fair deal or not.
With accepting money goes a duty of customer care. They didn't actually process the application. Their poor OCR software failed to read a hyphen and cancelled the application. If the applicant decides to go down the chargeback route his bank/credit card company will decide whether the embassy's reason for failing to provide their service is reasonable and acceptable.
Anonymous participant Agree. Passports are standardised and the embassy has a duty of care to you, their customer. A reasonable person would expect a decent standard of competence too. If I were you, I would put together another email stating these points and asking them to waive the fee. If they won't, initiate a chargeback with your bank/credit card company. They will ask the embassy for an explanation. If they agree with you or the embassy fails to respond within 30 days you will get your money back.