I actually have thrown some away for just the reasons that you stated.

Why wouldn't you return it to the shop where you bought it? It certainly isn't doing what you bought it for. In Australia you are entitled to a refund if an item doesn't do the job it is supposed to.

It'll probably be the same way when you put it in a quilt. I'd use it for something else. Maybe make pincushion or something that won't be washed.

I curtainly would not keep it in your stash. Months or years later you might forget about the quality and use it in a project. I would bring it back. If purchased from a quilt shop the owner should appreciate that you brought it to her attention so she will no longer buy from that distributor. If the owner reacts badly then you know she is a bit shady and you don't need to do business there any more. My guess is, you purchased the fabric from Walmart or Ben Franklin's, and not Hobby Lobby or an established quilt shop.

One of my quilt instructors taught us to use long strips of fabrics for yard things. I'd tie up my tomatoes with any fabrics like that....and NEVER let it near a sewing project of ANY kind. I put too much effort into a quilt to trust an unstable fabric in it.

Toss it, shred it, burn it. It is cursed!

I would be tearing it up into strips for rag rugs.

I would make a sandwich with it and use it for practicing FMQ,

I bought a piece of French Provincial beige tone-on-tone in a frenzy to get neutrals for a frien'ds quilt - no realizing that French countryside scenes with sheep was no my medium. I looked at again when I got home - and it went into the donate pile !!

I never put the fabric in the dryer , I always let it dry on a line. But I cannot throw away fabric, bad fabrics I already have used for toyes for the cats or as a pillow when they have they're kittens. But throwing away without using it first no I cannot, I will not use it in a quilt than , but for other things and after a while it can go in the bin.