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'd given up and was checking out alternatives online when she decided to call Apple. Bottom line, they're sending her a new one and we're sending this one back.
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Awesome. Same thing happened with my cousin - sort of. He bought his at an Apple Store, had a problem and they just swapped it out. I guess they figure they'll recoup any costs by refurbing your broken Shuffles and then by getting "back into iTunes" at .99 cents a song.
Good luck with the new one!
-Chris