The PEOPLE who failed, as in plural? I have a hard time believing more than 1 out of maybe 30 people could fail that test, unless they had nonfunctional weapons to qualify with. I've gone through two of these classes in the last year, (one for my chl and one for my wife's to make her more comfortable) and no one failed, even the people who admitted they'd never fired a gun in their life. One guy's gun jammed at least 10 times and he still passed.
I hope I'm wrong and you just had some really inept people taking the class with you, but it sounds like this instructor may be trying to gouge some more cash out of a few naive people. $50 to retake the test? Both instructors I saw said they'd let anyone who failed retake the test at their next class for no charge if they just showed up for the shooting portion.