An email or letter of apology regarding returned defective goods. It gives an apology to customer and provides a preliminary assessment of the cause(s) of the defect. It also suggest to the customer instead of providing the refund, the price be applied to a replacement model instead.
We are extremely sorry to hear that the [PRODUCT] you purchased [were found defective in our shipment] / [have not lived up to your expectations]. We are very concerned about the issue and appreciate your returning them to us. Frankly, we were surprised that they were found to be defective and [our technician / our quality control manager / the manufacturer / product development team] is already at work trying to discover the source of the problem.
We are glad to assume the shipping costs you incurred, but may we suggest that, instead of a refund, we apply the price of [PRODUCT] with replacements model [x] [from a different manufacturer]? Your past purchases of model [x] will bear out their reliability, and we are sure that [you] / [your customers] will be pleased with model [x].