What is the ruling on my mother exchanging a faulty iron for a sound one from the store without the seller's knowledge, and is expiation required for that?

If the iron is defective, such that its price is less than similar irons, then your mother has the right to return it. If the seller procrastinates, she may resort to stratagem to obtain her right. However, if it is not defective but merely of lower quality, then your mother does not have the right to return it. It is forbidden for her to deceive the seller by making him believe it is unused. She must repent, seek forgiveness, and inform him of the truth.