The Protocol of Gift Exchange
Is it okay to tell someone that you have exchanged his or her gift? In the protocol world, the answer is NO! It is not acceptable to tell the giver that you have taken back a gift unless it is to exchange it for a different size.
You may be tempted to discuss an exchange because the gift came with a gift receipt. So too, you may know that you will never wear a gift item and want the giver to know that he did not waste his money. You may want the giver to know that you have purchased something you really like and truly appreciate his gesture. However, regardless of the justification, it is not proper to tell someone that you have returned his or her gift.
The holiday season is about giving, not receiving. Although the giver may claim that it is fine by him if you return his gift, telling him about the exchange is counter to good etiquette. If someone wanted you to purchase your own gift, you would have received a gift card or cash. Many givers, especially family members, may verbalize that they want you to have what you really like or want. However, in the end, they don’t want to know that what they purchased for you is not to your taste.
So if you are planning on returning a gift this season, please do not mention it to the person who gave it to you. Make your return discreetly. It is better to hold back on any discussion rather than run the risk of hurting the giver's feelings, however accidentally. Remember that a gift is selected and given with the best of intentions.