Sounds like it's a glitch, however the comment about stat loss and insurance got me thinking.
One of the biggest complaints people (non-factioners) have about factions is that people join factions just for the super-cheap ultra-powerful gear. Geez, what wouldn't a normal person pay for a free FCR3 on a crystalline ring (I'd pay 50m easy) or a Kasa with DCI, or all the other gear for that makes the regular stuff look like garbage.
Sure, I understand that this type of gear is intended to get faction PvPers up and fighting without spending the hundreds of hours farming artifacts or the millions and millions to buy them. I can definitely support this idea, and I like that hardcore PvPers can make faction fighters across many shards and get into the action right away.
The complaint, of course, is that people get the cheap super duper gear, then use it not to fight in factions, but to do PvM stuff, farm peerless & spawns, and worst of all, attack non-factioners using their gear as a huge advantage (admittedly less of an advantage now with imbuing, but still a pretty big advantage).
So, I just thought of a solution. Factioners that are abusing the gear for advantage in PvM and to attack non-factioners are gonna hate this, but I don't think the real faction PvPers that the arties were designed for will mind much. Institute stat loss for anyone wearing faction arties when they die, whether it's to spawn or to a non-faction fighter. I really think this would keep people from abusing faction arties and using them primarily for non-faction activities.
I think maybe some sort of sliding scale would work. Assign a point system (or number of minutes) to each arty. So if someone is just wearing a faction stormgrip, they get 1 minute of stat loss, but if they've got on an orny, crimmy, crystalline, wizard's glasses and other stuff they might get 20 full minutes, just as if they died in a faction fight. Maybe assign different values for how they died as well. If they died to monsters or spawn, then maybe 1/2 the time for stat loss; but if they die to a non-faction fighter, a full 20 minutes. I don't know, obviously the specific values would need to be balanced.
So, sorry to get off-topic on this thread, maybe I'll start a new thread with this idea. I'm kind of proud of it actually, don't know what others think. This day and age of imbuing, where it's pretty easy to create and equip multiple characters, I think it's a travesty that factioners get such a huge advantage in non-faction activities like PvM and attacking non-factioners. And since the faction revamp seems to be on permanent hold, stat-loss for using faction arties in non-faction situations seems to be a reasonable solution.