Hi Guys, So quick story... my band had the exact same issue as reported here. I had been out on my bike on a cold morning, when I got home and took the band off I noticed a big tear exactly where the internal plastic finishes inside the rubber band part. I contacted support even sent them a photo on request and they told me to send it in. Eventually I got the band returned to me with the same letter posted here that basically its not covered.
I clearly wasn't happy; and when I found these forum threads with photo's of the exact same issue in the exact same place I replied to Microsoft asking what the next step was and that I wanted to complain and escalate the issue etc.
This morning I have received the following reply:
I'm very sorry about that, and I completely understand your frustration. There has been a recent policy in the last few days that will allow us to exchange that Band for you under your warranty. All you need to do is contact us via the Band Support page and we will be able to set that exchange up for you.
I apologise for any inconvenience caused.
Have a nice day from the Band Team.
So I'm now in the process of re-opening the case, re-packaging the band and sending it off for a second time, but basically if you have been told previously its not covered then it seems they have changed their policy and you should contact them.