This is the joys and horrors of ordering a gun (online or otherwise). On the plus side, you get to find a gun you couldn't find locally. On the minus side, when things go bad, its tougher to deal with.
If they sold the gun "as is" they its all on you. They sold it as NIB, then you have certain expectations, and so should they.
REPUTABLE sellers usually give you an inspection period. 3 days (from receipt) is common. Personally, if they don't even offer an inspection period, I would buy from someone who does!
How much time has passed since you got the gun? Did you send pics to the shop so they could
see the condition?
At this point, the shop that sold it is the main suspect, BUT, they may not be completely responsible. It is possible (remote, but possible) that the shop received the gun in that condition, and never noticed it.
Open box, glance at the gun, verify serial #, put it in stock. Same thing when sold. No reason to closely inspect the finish (or the function), after all, the gun was "new".
ALL we know for certain is that while the gun might meet the technical definition of new (unfired, never before sold at retail) that gun is NOT in "new" condition. Somebody, somewhere, worked on it for some reason, and did a less than flawless job.
Only 4 possibilities, I see;
1) the gun left S&W in that condition (possible, when pigs fly, TV commercials don't count
)
2) You did the damage, and shoddy repair, and are looking to scam someone (I take leave to doubt that, only mention it as a possibility)
3) Damage & repair happened at the wholesaler's level, and the retail shop didn't know, and never learned (possible, not highly likely, but possible), and sold you the gun in good faith that it was NIB.
4) Damage and repair happened at the retailer's, and the gun was passed off as NIB. (seems most likely, at this point) 4a) possible that the retail shop owner(s) did not know this happened. It might have been someone in their shop was responsible for the condition of the gun, and never told the owners.
There is little point in involving the ATF, as noted, they care little unless it is a firearms law violation, (which this does not seem to be).
Even if you get a satisfactory result from the dealer, I think S&W ought to know what happened. They might have gotten other complaints about the dealer/jobber...
If the seller basically says "eat it", I would definitely get S&W involved. I would send them the gun for evaluation, and request a full comprehensive evaluation and letter from them with their findings. And I would pay what that cost, from my own pocket, if I had to. A letter from the maker, stating the exact condition of the gun as sold to you, vs the condition it left the factory can go a long way in any claim you could bring against the retailer.
Its not right, but at that point, to me, the principle is more important than a little bit of cash. (and no, I'm not wealthy, currently retired and living on 1/2 of what I made when working)
The firearms industry is full of honest, ethical people. However, there are some who are as sleazy as the stereotypical used car salesman. When we find these, they need to be publicly exposed for who they are, and what they are doing.