That would be my order of operations. It’s not a pleasant experience but you’re already unhappy
so do you guys think it is more than a cosmetic problem?
I understand, but you MAY have to push them to get a resolution!
A friend had a Trek bike that repeatedly had issues with the BB shell. It creaked, it was fixed, it creaked, it was fixed, it creaked, it was sent to Trek, they put a sleeve in it, it creaked, it was fixed, it creaked, someone checked the dimensions and found out that it was a manufacturing error and should have been replaced, but Trek dug their heels in and refused to replace it. They kept ‘fixing’ it with more glue, and shims. He finally had to get an attorney and threaten to sue. That is when I lost touch with him, but I heard a rumor that Trek still refused to replace it, but didn’t have much confidence in that rumor.
It was a Trek Dura Ace Di2 expensive bike! Expensive… Other times, I’ve heard of people having to push-push-push and complain and go to other dealers too. It’s like health insurance apparently, they will deny you until they don’t. Other people I know have had no problem getting a new frame. shrug
If they won’t replace the frame, push for a CT evaluation. Tell them that you can’t ride it, and are honestly afraid of it and think that they should try to make you feel better about that bike if they are so sure the frame is fine, good to go.
Is that ‘damage’ a real problem? In and of itself, maybe not, HOWEVER it could be a serious issue if that void leads to a gap in the fiber sheets used in all that resin. The ‘other issue’ is if they shipped that with a flaw, what else could be flawed. Hopefully nothing, but it looks like they cheated some resin in that area, and could have a bigger issue deeper in that area. This brings in their ‘attention to detail’, and if they apparently don’t care, there could be other issues buried deep in the frame that could happen after the warranty is up.
It could be a bigger problem. Is there something that caused that resin to not fill? Is there some void there that displaced the resin? Is their lack of attention to details also missing other issues?
Also, if you are in the US, look for departments in the state gov that might deal with consumer affairs. Open a case with them and let them know that you haven’t gotten anywhere with the vendor. Don’t give up…
You bought a new product. It showed up not new. It’s that simple. Get it replaced or forever be bothered by it and potentially at risk. You’ll be descending or putting big power down in a sprint and you’ll always be thinking about that seat stay.
More like: 'You bought a new product. It showed up with a flaw. The product can be difficult to manufacture and improper manufacturing can include various flaws and defects that could fail under stress potentially causing great bodily injury and even death. It’s possible other flaws might have been missed, and as an act of ‘good faith’ you would like them to replace the frame, or pay to have it evaluated for safety.
To the OP: If they don’t replace the frame, or step up and prove to you it is totally completely safe (with a CT or other commonly accepted and accurate test) you will have to push. (I had to push Wahoo, pretty hard at times) It sucks to have to do it, but the worst they can say is no, and that opens up more options to you. Don’t accept ‘no’.
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This is a weird story and might not work in your state, but in one state, if you return something defective, and they don’t send it back, they have to give you your money back. No ifs, no buts (or butts). I can’t remember the state, but I found that an interesting tactic, if it still works.
But going into this from now on, the OP should try to ask for their money back. Plain and simple. It was received damaged, I want to return it. (Take some better pictures of that spot, and the rest of the frame (just in case).
I think there is enough evidence to put the ball in the bike shop’s and manufacturer’s court. If the bike manufacturer wants scans (ultrasound, X-ray, CT, whatever), they should pay for it.
I don’t think I suggested that the OP pay for the tests. At this point, they have to prove it’s a good frame.
Completely agreed. 
I wanted to add to what you wrote, not suggest we disagree on something. Ditto for pushing hard if necessary.
Agreed. Don’t spend a dollar on this process. If you’d wanted a bike with a broken frame you would have ordered one advertised as having a broken frame.
No worries. Misread your post. BUT if they won’t budge on it, getting a scan somehow might show something in that spot, or elsewhere, might help urge them to get real and kind… But I have no idea how much an industrial CT might cost. There are places that do that kind of non-penetrating testing on a continuous basis, so for them it might be cheaper. Striping the frame would be a chore for sure.
I hope they make the OP right. A crap frame could sure ruin the feel of a new bike.
would you trust this frame in general and go for an exchange or take a complete refund and walk away?
10 days after handing over the bike I got the great news that the damage has been accepted as a fault and I will get an exchange.
Thank you all for the support
The paint is going to be too flexible to chip like that. Id put my worthless guess i on dry fibers there. This is a an easy warranty, especially since it’s a black bike, which will be easy to replace.
The warranty shouldn’t take more than a week end-to-end. Don’t complicate the transaction by riding it.
These bike shops buy bikes from the manufacturer then sell them to you. They are filing a warranty claim on your behalf. The bike manufacturer isn’t just gonna give you a new bike worth several thousands of dollars in the snap of the fingers. That’s most likely a paint chip as well, so be patient, especially if this paint chip is costing them thousands of dollars in lost value.