Maybe REI's prices wouldn't be so high if they didn't have to deal with shady returns like the OP's?
It's a valid point, but to my knowledge, their high prices and excellent return policy have always gone hand in hand. That's not to say that it doesn't have a negative effect - like I mentioned, REI recently had to scale back their return policy. But from what I understand, it more had to do with habitual "gear renters" that would wear stuff out after several years and essentially just exchange them out.
It's unfortunate for the rest of us, and OP isn't helping. But all I'm saying is that REI accounts for this, and OP's case isn't unusual or all that egregious as far as what REI sees, so some of this overreaction needs to be managed accordingly.