I had the same thing on a mid size unit. The coating started to bubble at the rim and then flake and i emailed support with photos and a serial number and they sent a replacement basket with no hassle so it is worth a quick try if you are within a year.
While I waited I cooked everything in an oven safe pan or loaf tin placed in the basket so nothing touched the peeling surface. Works great. Also check how the drawer slides line up. If the basket lip grazes the housing every time you push it in you can sometimes reseat the drawer or slightly nudge the rails so it stops rubbing and that alone slows the damage.
