Fuji e550 zoom error

have the same error message on my brand new Fuji Finepix E550. It worked ok for awhile, but a couple of times it seemed to "lock up" and would not take pics. But after changing batteries and/or turning it off and on, it seemed to be ok. But now it is stuck in the halfway-out zoom position (lens cover is closed tho) and I am getting the "zoom error" message. Owners manual says "zoom error" indicates a camera malfunction. I called Fuji authorized repair in NJ, and was told I have to send it in and pay for shipping and required insurance. They will only pay to send it back. I ordered it online and e-mailed the seller yesterday, but am not too hopeful they will exchange it for a new one. I've been doing some surfing and am finding other postings with same "zoom error" on new E550. It would appear my camera is not just an isolated lemon. Looks like it might be Fuji's lemon. I did a lot of research on the web as to what digital to buy for my first one (I'm an SLR holdout), and I narrowed it down to two models. Obviously I picked the wrong one. What a bummer