I was getting the screen tearing with every console I hooked up. I tried every settings possible to prevent it, the only setting that worked was playing the game with GAME MODE turned off. (But then I had the latency issues)
After replacing all my HDMI cables etc, I narrowed the problem as a hardware/software problem with the TV itself. I returned the TV for an exchange.... No screen tearing issues after that. Later on, I ended up getting another replacement due to the second TV having Banding Lines so bad, it was unwatchable. The smart tv aspect also wouldn't allow the youtube app to communicate with my ipad.
I am now on my third TV, and it is perfect. Not a single flaw. I also made sure it was a version 2 model.
Glad you were able to return the TV and it's working. I just noticed the banding on mine a moment ago, and I haven't changed any settings (I did also have Game Mode on). The outside of the box says "Version US02".
It's really too bad that this is happening. I might call Crutchfield and see if they've heard of this. As soon as I brought up the TV's menu, the banding went away, and I never noticed this on my old LG set.
Otherwise it is a really great TV.