If the product is defective, give the customer the option of exchange or full refund. All packaging and parts should be in the box, otherwise a deduction could be made. If it's simply a "I don't want it," and the factory deal has been broken a restocking fee should apply. After all, it can't be put back on the shelf as "new". I've seen situations where someone will buy a large screen TV on Friday and return it Monday after the Super Bowl and balk at having to pay a restocking fee. Retailers are not in the business of letting you borrow merchandise.

In any case, the policy should be prominently posted.