The user did not use any game enhancement or copier device.
The user by proxy through their device is accused of using a game enhancement or copier device and banned from the service. The device is not defective - it is blocked from access to Nintendo's online service which is separate with its own agreement and not part of the actual device or product purchased.
If you had said "The user's account is blocked", you would maybe have a point, though arguing that someone did something by proxy opens you up to all sorts of legal risk. A sane company would ban people who install a hundred pirated titles, not someone who installs one or two.
But as long as the ban is tied to the physical device, and a major part of the device's functionality no longer works, no reasonable person could argue that the device is working correctly, and if the device is not working correctly and cannot be made to work correctly by the user, that constitutes a defect, by definition. So unless your definition of "defective" doesn't agree with the dictionary's definition, the device is defective, and arguably by design.
That's enough to give Nintendo justification to refuse the return and send it back to the customer. In reality you are not going to hire a lawyer to file a $500 claim over the Switch, because it would cost you much more in attorneys fees which are not recovered, and you are forced to use arbitration (by the Mandatory arbitration and class action waivers) which are stacked against the customer.
Not necessarily. See my comment earlier about contracts of adhesion and unconscionability. Given a large enough class suing for class action status, there's a very good chance that the arbitration clause would get thrown out. Alternatively, given a large enough number of individual members all demanding arbitration at once, Nintendo could very well do the math and conclude that waiving the clause is in their best interest because of the cost of defending so many arbitration cases. The deck is only stacked against you if you don't band together.
Amazon's vendor contracts determine whether or not Nintendo has to take the return, not any agreement between the customer and Nintendo.
It's doubtful Amazon has any kind of active contract. Even if they do; you bet Nintendo would be dictating the terms of that contract, because they definitely would.
Amazon has a standard vendor contract. Take it or leave it. And they're a big enough player that there's really no negotiating with them, even for relatively big players like Nintendo, because Amazon could quite literally buy a ~86% supermajority interest in Nintendo with cash on hand.
It is entirely possible that third-party resellers would be the ones stuck with the useless hardware, rather than Nintendo, if the sales are happening through third-party Amazon vendors rather than directly. But if those resellers end up losing their shirts and going under, Nintendo won't have sales, so it isn't in Nintendo's best interests to screw them.
Amazon was an authorized reseller of Nintendo but lost status at some point. Both Amazon and Nintendo are going to know about consoles that have been restricted due to user behavior, and that in itself is not a defect in the product. It's like trying to return an "iPad with Verizon SIM" because you broke Verizon's rules and got banned from having an account with them.
You absolutely can return such a device, at least within the return period, because Verizon doesn't ban devices; it bans users. A different user obtaining that device would still be able to use the device. That's a key difference between what Nintendo did and what other companies do. By banning the device, rather than the account, Nintendo is effectively reducing the value of the hardware by hundreds of dollars. That's fraud, and there's really no grey area here.
Under some circumstances you may be allowed an exchange, but it's not a warranty return, and you probably get to pay a big restocking fee.
You keep using the word "warranty". A warranty is an agreement between you and the manufacturer. It has nothing to do with the reseller accepting a return. And yes, with Amazon, "It doesn't work" is a valid reason to return something. In fact, that's true with almost any company. Whether you can return it for a refund or just a replacement is another question, and if *you* are banned, then a replacement won't help.
But again, that's not what Nintendo is doing, at least according to the summary, so "it doesn't work" not only is a valid reason for a return, but also is likely to solve the problem.
then Nintendo generally speaking will be hard pressed to prove that their terms of service (being a contract of adhesion) are not unconscionable.
It is unlikely a court is going to find Nintendo doesn't have the right to ban whoever they want from their online service. We have yet to see a court do so to another online service provider.
We have yet to see a case where a company massively reduced the resale value of hardware permanently.
Of course Nintendo's user agreement also contains Forced Arbitration and a Class action waiver, and you have notice of these agreements on the retail package before you ever purchase your switch and open it up. It's a Clickwrap software license, and clickwrap software licenses are generally enforceable with respect to the software, no matter how restrictive the terms get about your usage of the software.
There's actually a pretty long list of those sorts of licenses by major companies that have been found unconscionable. The devil's in the details.
Nintendo has incentive to make used copies of games scary for consumers because they will make more money selling directly to the consumers, and this starts to rapidly fall into the "attempt to monopolize" section of the Sherman Act, which makes the behavior legally actionable federally.
It is not shown to be a violation of the Sherman act for a copyright holder to prevent the resale of their own licenses. Antitrust laws are great for promoting competition and all, but they don't require a company to allow a used market in their own intellectual property. You won't find resale of developers' games where the package shipped a printed steam code, or other one-time key, for example.
True, but that is a decision made by the game publisher. When it is a hardware vendor, which qualifies as a gatekeeper, it becomes a very different matter. We're on the verge of seeing Apple seriously beaten down by the courts over locking down iOS devices to only allow purchases from their store. And making it scary to buy games that are sold on physical media is a substantive step towards doing the same thing on Nintendo's game platform. From an antitrust perspective, going down that path would be highly inadvisable in the current legal climate.
To the extent that the game publisher and the gatekeeper are the same company, the antitrust concerns actually become more of a concern, rather than less, because you could argue that the game publisher Nintendo is colluding with the hardware vendor Nintendo to increase the value of their online store by discouraging third-party sales in ways that drive the industry towards a gatekeeper store monopoly. And now you have an even bigger mess, and you might even have problems with the DMA in Europe as well.