I did return a fat quarter to Joann's once. When I opened it, it had a ragged hole where the weave had skipped, apparently. But like you, I've never thought of returning cut fabric unless it was damaged in some way. Also, I've seen fat quarters in stock that have clearly been opened and folded back so I assume someone returned those.
I was also astonished to learn that people return books! I assume, too, they may have read them and just want their money back. But maybe they return books that are gifts, either because they don't want it or already have it.