So based on the tests it's either the reader or an issue with the controller. Most likely the reader. Since you said they'll replace it for free just get another - or a USB 5-in-1 reader as suggested by Samarcia.
@ Samarcia - Remember that a particular incident that you see while working on a rig may not be a rule to follow while doing a process of elimination. Don't always be "hard and fast" to your experience only, as it may not be the case all the time. Post count don't make you a techie or not - just means you type/chat a lot. Just to be clear, not discrediting your suggestions, but I don't make it a habit to jump on the first thing that comes to recollection when I don't physically have the rig working on.
On another note - good to see you being more active. We're lacking activity from our female members so always glad to have feedback.
Knowing the solution doesn't mean knowing the method. Yet answering correctly and regurgitation are considered "learning" and "knowledge".