Best Buy did replace the device since it was in the two weeks return window. I guess if it was outside of that window, it would have been MSFT's warranty that replaced it.
The new device has the SAME PROBLEM!!! I opened another support ticket with MSFT, and they suggested I wait for a January update which hopefully resolves the problem.
I'm getting the Bluetooth audio cut out problem as well as random pausing of whatever I'm listening to. Mostly Amazon Music... Very odd.
I also have some interference problems when my Duo is connected to Your Phone and Bluetooth on my PC. It will make my mouse unresponsive... if I turn off Duo's Bluetooth the mouse works fine. Sounds like a different issue and may have even been this way with my original Duo v1.