Requesting/offering a replacement of a returned item?

I ordered a used phone from a professional shop, but apart from the already described damage, it had undescribed damage that rendered the camera of the phone useless.

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The seller has more of the same model of phone in better condition (and slightly higher price), and so to make up for my inconvenience they have caused I suggested that they could replace the phone with this better condition copy (assuming that this one is actually as described), to turn my experience into a positive one.

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They then sent a private email with a return label (outside of ebays system, although later wrote the tracking number of that return label in an ebay message), but as I am aware this might not be safe to use? On the other hand, I am not sure if there is an official return option to request(or offer) a replacement, only a refund.

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So, is it safe to use a privately sent return lable? (or are there any other possible scam risks?)

And is there any safe way to return the phone for replacement through the ebay system?