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I'm pretty sure they don't brick your hardware, they just permaban you from their network. No more laggy Smash Ultimate netplay I guess.

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I have fortunately not run into this problem yet - but all the Switch homebrew forums, Reddit communities and other sources say that your console becomes completely useless. You aren't just banned from online play and store. According to what I read it seems that even offline use will not work at that point.

Nintendo only bans for cheating in online games or installing pirated software. Nintendo has (so far) not issued any bans for just installing or using custom firmware.

There is no circumstance in which Nintendo remotely bricks your console.

When you get banned for cheating, you are banned from that specific game's servers.

When you get banned for installing pirated software, you get banned from all Nintendo Switch online services. The console can continue to be used fully offline.

Intuitively that is what I would expect too. But information on the subject is all over the place. Could you point to an established source on this subject or expand on how you have confirmed this information?

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