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Yes, possible defective. -How old is it? Had any power issues to the house lately? any power surges? could also be the ONT outside your house or in your basement or where ever they put it.
Also, have you changed any of the default settings in the router ?
Try resetting the router with all devices connected to it turned off (including all TV's if you use that service from Verizon). wait to turn anything back on until after the router shows a green light on the internet light.
If you are using the TV service, how many do you have connetced? How many computers, including wireless? Can your neighbors access your wireless ? Are you connecting phones to your wirelesss? How many computers and or other devices are connecting?
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The Verizon Firmware have infamously small NAT tables by design (not sure why), and so they get flooded easily and kinda react how you are describing. you may have to bridge the router, and add your own to take over NAT functionality.
DSL reports has a nice FAQ that gives the different options and the trade off's between configurations. my initial guess would be that.