Yes, this would be covered under SanDisk’s 1 year warranty, but you’d be much better off exchanging it at Cosco. You’ll get another one same day. It can take weeks (literally) to get one replaced through SanDisk.
One thing to try first though is to make sure your earphone plug is all the way into the socket. The Fuze is known to have an extremely tight jack and many people have thought they had a bum unit and then discovered another little shove seated it properly and everything sounded perfect. Make sure there is no part of the metal shaft showing when it is plugged in.
