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bluesnews - Did you buy it from a local store? If so, you should be able to exchange it without any problem; it's clearly faulty.
donovanh - Sorry to say that I agree with the earlier poster in that yours looks like a fracture in the glass substrate of the screen. A terminal case, I fear. You say that you're in the UK, though; does your house insurance policy cover accidental damage? Most of them do. Getting the cost of the Reader back in return for paying a £50 excess on your policy is probably well worth doing.
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