Earlier quoted context omitted.
Indeed. Sounds good in principle, but how do you prevent someone from repeatedly returning items just to hurt a competitor and/or making frivolous defect/warranty claims against them?
There are hidden reputation and anti-fraud mechanisms at play in a lot of consumer areas (incentives, reviews, etc.), it would be trivial to apply them to this too. Most fraudulent activity isn't attacking competitors, as it's prohibitively expensive, but instead propping up their own reputation. i.e. Amazon's fake reviews are mostly five-stars.
Very inexpensive. Especially when expensive products are involved + few competitors. The ROI is massively good.