[mothered]

Now they want me to return it to finalize the process, but they said Fedex should send me a tracking number, so, does this mean i need to return it to be done, or that ill get it.

What they've stated, Is that the product must be returned and a replacement will be Issued thereafter.

Tell them that you had no purpose keeping a defective Item, and also had no Idea that they need It as part of their replacement process, so you've thrown It out.  Also, apologize for any Inconvenience caused.

Also they keep talking about fraudulent activity, does this mean if i dont return it something will be done?

In other words, It means that If you try and manipulate the label or send another Item to circumvent their request, It will be deemed fraudulent.