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I think the whole situation could have been avoided if the seller declared the screen defect on the auction. You probably would not have purchased it. I generally try to only purchase Apple products on eBay with valid Applecare.
 
That's a screen defect. If it were under the original warranty, it would probably be replaced. That particular unit was probably one that was returned/exchanged already if the eBay seller listed it as refurbished,Thanks.

I've never purchased a refurbished item, but I have used items, however they all had Applecare.
 
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