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Fret Issues

I have a cheap $400 Samick Greg Bennet Series Acoustic/Electric guitar that is about 7 years old. The first 2 or 3 frets are starting to get grooved pretty bad, are really causing issues with the guitar staying in tune. I've had it setup properly, but the issue still exists. I tend to have to tune to a chord, but different chords still make it out of tune.