It's a common practice. No dealership I know of tells their customer that the new car they are buying has had paint damage or even minor body damage repaired. They are not required to do so under current laws in most states. I believe the most restrictive law covering this is CA's and that law states:
So under the VC9991, if you are buying a new $50,000 car in CA and it has been damaged the dealer can repair it up to a maximum of $1,500 (3%) without telling you.
This vehicle code (9991) has in fact recently been tested in the courts and won by the dealership. Seems that a Hummer dealership had a vehicle vandalized by the Earth Liberation Group and was repaired and sold as new. The buyer discovered the repair and sued the dealer. The dealer won.