Sounds like a problem with the USB reader.
This would be a good one to phone into HP Support if your printer is still covered by warranty. An easily reproducable and isolated problem like this should be quick and easy to diagnose and send out replacement parts or another device.
The only other thing not mentioned here would be a Cold/NVRAM reset of the device. Who knows, maybe there is something stuck in the printers memory that a reset can clear out for you.
Cold Reset steps should be posted out there, if not then let us know so we can try to dig them up for you.