Let's try this in a different direction: if I purchase a product and it doesn't hold up as expected/advertised, it seems entirely reasonable to return it and at least ask for a refund. If the store provides one (because it is their policy, typically) then they have invested in customer retention. If they don't ... well, that's their choice, and I'll decide what I want to do going forward.
I have a pair of LL Bean boots on which I've entirely worn off the tread, and the uppers are separating from the rubber bottom. I don't expect a refund (I bought them in 1987), but I'd find it entertaining to send them back (and maybe they can recycle the components?) I'm trying to balance the guilt I'd feel (because these things held up far past what I would reasonably expect) with their lifetime warranty. I'm 90% certain that if I called, they'd tell me to just send them back and they'll replace the things. And that I shouldn't worry about it so.
I bought a pair of travel pants a few years ago that I took on a 3 week trip and wore every second or third day. Unfortunately, they came home saturated with the smell of rhino poop, and nothing I tried made them not stink. I went back to the store where I bought them and asked if there was some special cleaning stuff I could use (on a weird synthetic material), and they just refunded me for the pants. Ethical? I wore them a lot while traveling, but I typically keep pants for years, and they were unwearable.
RetiringEarly, while I appreciate your impulse to encourage people to act ethically, you're missing some context on FrugalParagon. Also, your stance is coming off as inflexible and kind of jerky: without knowing anything else about the person you're responding to, your "voice" here is quite aggressive. And since you didn't know how the conversation went when she returned the toaster, the aggression seems misplaced. (Based on what I've read from FP and what I know about Costco policy, I'd guess the conversation was "I totally screwed up and did XXX which broke the toaster. Can you help?" "Sure, fill this out and I'll grab you a new one." More a situation that will engender lasting customer loyalty then an example of fraud.)
And Costco partly has a generous return policy for exactly the "did not like" situation -- not many folks here would want to buy a 24-pack of something new'n'different without the option to return it if they found it yucky.