As far as returning the stick to Kingston, the risk there is if there are any sensitive files or personal information on the disk you would not want others to see. Kingston, for sure, is a reputable company but they cannot ensure each of their employees are every day.
It is possible (if not likely) Kingston would just toss the stick in the recycle or trash bin and not spend any resources ($$$) trying to fix it. On the other hand, if they are seeing a pattern of returned sticks, they may analyze it thoroughly to see if there is a design flaw, widespread manufacturing defect, or just a one-off problem.
IMO, it should be treated like any other mass storage device leaving your hands. If you cannot "wipe" all data from it, the device needs to be physically destroyed.