BabyEarth Bad business practices Round Rock Texas

We received a infant car seat as a gift from Babyearth for a baby shower. When it arrived, the box was slightly worse for wear, but we didn't care. We went to install the car seat in my wife's car and discovered it did not fit.
My wife contacted babyearth and they were willing to exchange it for a seat that we knew fit in her car. No biggie, right.
So they sent us a return shipping label, we put everything back in the box as we had found it, my wife even went so far as to tape the instructions and registration cards to the inside of the box. And sent it off.
We were getting anxious about getting the new seat back as our due date was fast approaching, so after a week of nothing, my wife called them and they informed us that the shipping box was damaged, the seat was scratched and the instructions were missing. Therefore they could not exchange it or refund us.
Now take in mind, this was their shipper. They chose! Since when are we responsible for how a third party shipper of their choice treats their package? So I call, now all of a sudden they're willing to offer us store credit (minus 25%) if we can get them the instructions. They were in the box when we shipped it! I asked for pictures of the item as I was starting to smell something fishy here. Plus, that's why you pay the extra $5 for insurance!
When I got the pictures, the box was in the same shape as we received it and the pictures of the "scratches" merely showed the bottom of the seat. I honestly didn't see any scratches.
Nowhere in their return policy does it say ANYTHING about the condition of the shipping box nor does it say that the customer is responsible for Fed-Ex's job quality.