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Last updated: August 6th, 2013 at 08:50 UTC+02:00
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First and foremost, the exchange is good for one time swap and if you damage the device underwater again, you'll have to pay the regular charges to get it repaired. Secondly, the exchange is applicable only for liquid damage and not physical damage. Thirdly, the devices that come under the exchange program must have been purchased directly from AT&T and not from other channels.
Quite some conditions to fulfill but if this is true, it certainly is good news for consumers who may have accidentally damaged their device underwater.