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Yes Kobo customer service sucks, but if you look at the bottom right part of the screen you can see angled lines where it's obvious the glass substrate is broken. There are all kinds of threads here and anywhere else you find info on e-ink that the substrate is the weak link on all eink readers (there are a few teardown pics on mobileread here that will show you what it looks like -- it's a near paper thin sheet of glass). Having said all that, it usually isn't harsh mistreatment of the device that causes this (although if you drop something hard on the screen it could), but twisting of the housing that stresses the screen and leads to it breaking. And no, having it in a case won't prevent this type of damage unless it is hard cover enough to not flex. Amazon is a much bigger company so they seem to often cover this type of damage strictly for customer relations even though technically it wouldn't fall under their warranty either.
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