According to GamerReports.com, a GameStop "source" informed them of the new policy, sending a photograph of an internal memo that confirmed the change. The report says the Product Replacement Plan for the console, which provided customers with over-the-counter replacements in case of hardware failure rather than forcing them to wait weeks for a depot repair, was dropped because of the expense generated by the system's high rate of failure.
The memo says, "Effectively immediately GameStop will no longer offer PRPs on new, refurbed, and used Xbox 360 systems. When prompted by the POS 'Do you want a PRP plan added to this purchase,' please press 'Escape' and DO NOT offer PRPs to customers purchasing an Xbox 360 system. Customers purchasing a new Xbox 360 system will still receive a 1 year manfacturer's warranty from Microsoft."
Microsoft's next-generation console has been plagued with hardware issues, including problems with scratched discs as well as the infamous "Red Ring of Death." Microsoft has refused comment on the console's official failure rate, but in July announced that the predicted expense to address ongoing hardware failures would top $1 billion.
GameStop said existing Product Replacement Plans on Xbox 360 systems will continue to be honored. Photographs of the original GameStop memo are available at GamersReports.com.