Active Class-Action Lawsuit over Undisclosed Service Degradation (critical) Cursor is facing a class-action lawsuit over 'undisclosed service degradation' stemming from a performance drop experienced by users since September 4, 2025. This indicates potential failure to maintain service quality or transparency regarding operational issues.. AI Support Bot Hallucination Caused User Backlash and Subscription Cancellations (high) In mid-April 2025, Cursor's 'front-line AI support bot' (named 'Sam') hallucinated a non-existent company policy, falsely stating that subscriptions were limited to a single active session. This misinformation spread rapidly on developer communities, leading to user frustration, public backlash, and confirmed subscription cancellations. Co-founder Michael Truell issued a public apology and confirmed the company had to refund affected users.. Active Legal Dispute with Microsoft over VSCode Extension Blocking (high) Cursor IDE is involved in an active legal dispute with Microsoft. The conflict arose after Microsoft blocked VSCode-derived editors like Cursor from accessing Microsoft extensions following the release of Microsoft's Agent mode. This dispute centers on open-source licensing, copyright issues, and the ability of Cursor to integrate with the VSCode ecosystem, potentially impacting core product functionality.. Pricing Model Change Led to Unexpected Customer Charges and Required Refunds (high) Cursor implemented changes to its Pro plan pricing structure, moving to a model that provides $20 worth of AI usage, after which users must manually purchase additional credits. This shift caused 'confusion and frustration' among subscribers who encountered 'unexpected charges without adequate notice,' forcing the company to promise refunds to users charged beyond their subscription limits.. Contradictory Founding Dates and Entity Names (medium) The company's history is inconsistent across sources. Multiple sources state the parent company, Anysphere (behind Cursor), was founded in 2022 by four MIT graduates. However, one source identifies a related entity, 'Cursor Tech,' founded much earlier in 2017 by three of the same founders (Aman Sanger, Sualeh Asif, and Arvid Lunnemark). This discrepancy requires clarification regarding the legal and operational history of the current entity (Anysphere Inc.) and its predecessor/related entities.