Selling a defective product without clarifying its defect (to the buyer) is not permissible as it is a form of deception, about which the Messenger of Allaah sallAllaahu ‘alayhi wa sallam said:
مَنْ غَشَّنا فليس منَّا
“Whoever deceives us, then he is not of us.”[Muslim no.101]
And it has been confirmed from him sallAllaahu ‘alayhi wa sallam that he said:
البيِّعان بالخيار ما لم يتفرَّقا فإن صدقا وبيّنا بورك لهما في بيعهما، وإنْ كتما وكذبا مُحقت بركة بيعهما
“The two people involved in a sales transaction have the choice (of going through with it) as long as they do not separate from each other. If they were truthful and they made things clear, they will be blessed in their sale, and if they concealed anything and lied, the blessing of their sale is eradicated.” [Al-Bukhari no. 2079 and Muslim no. 1532]
Whoever deceived and sold a defective product at the price of a good product must repent to Allaah, feel guilty for what he did and not repeat that act again. Also, he must seek the pardon of whoever he cheated and rectify matters with him by returning to him what he deserves.