Who's absorbing the cost?

The other day I purchased a couple of albums from HMV.

Got them home and discovered that one album (with two discs) was damaged

The damagewas to both discs and looked identical, it was though they had been jammed into a thin slot and had pressure applied to actally bend them.

I returned them to the same HMV store only to be told that I could either
  • Get a gift certificate
  • Get an in store credit
  • Exchange for another album of equal or greater value
  • BUT Refunding my money was against corporate policy
So I contacted HMV and got the same reply.

They also said they had no option because the Record companies refuse to take back damaged goods

However, most other stores I deal with do offer refunds on damaged albums.

My point to HMV - even if I exchanged the album they would still be left with an album they could not sell and would have to write off. So they could actually give me a refund and glean a lot of customer goodwill, but instead chose to alienate me.

Sometimes corporations cannot see the wood for the bottom line.

So who does absorb the cost if not the record company 
  1. The distributor
  2. The retailer
  3. The store
  4. The customer, i.e. built into the price of each album
#4 you say? That's what I believe

Thanks in advance ūüė©
I don't understand how the (lack of) quality control exists in multiple plants like this will all the defective pressings.
I remember the Old Days. Defective record ; you got a new copy of the same record. Do not ever remember getting refunds. I am a long time customer of Music Direct ( lived 20min. walk- 5min drive ) now they moved, 1/2 hr drive. Never a problem w/anything.
From the retailers named in the comments, I gather that most of the commentators in this thread buy their vinyl at a distance, using the internet or an 800 number.  When a record store is available, it does have one advantage in dodging defective records (or discs):  you can unseal and examine the album in the store in front of the salesperson.  The surface should be pristine.  If there's any question about a defect, a player should be available to test it.

I occasionally bought used CDs at Amoeba in LA.  Because the inventory was used, it was mostly unsealed, and there was no problem with examining the disc before you purchased.  Sometimes Amoeba would reseal albums that it considered to be in very good physical condition.  I wasn't persuaded, so whenever I considered a resealed album, I asked the salesperson to open the album so I could examine it.  I distinctly remember rejecting potential purchases on two occasions.

This is why I support my local record store. I'm rather lucky that here in Columbus, OH we have 5 or so locally owned shops. I'm in them enough that if there is an issue with a record they replace them. If they don't have any more copies they will usually offer me a refund, probably knowing I'm going to purchase something else anyway. 
HMV's policy is irrelevant.  You purchased good playable discs - they did not provide them.

Dispute the charge on your credit card.  If HMV doesn't like it, let them take you to small claims court.  You can also complain to your state attorney general's office of consumer protection.