You get 75% of the letters every time, in order. It's pretty trivial to merge these together after a few examples. Every time you ask for a set of characters, the set of possible outcomes shrinks, and 1820 isn't exactly a large set of possibilities to start with (for your 16-character example).

Given that most people do not use random passwords (and are even less likely to in with a scheme like this), guessing the missing characters is likely trivial for most passwords.

Also the scheme you're describing is very clearly not the one in use here given that they asked for only 4 characters.