Earlier quoted context omitted.
Some people do abuse this to rip companies off, to varying degrees; I know some people who treat returns as free rentals, buying something, using it without ever intending to keep it, and then returning it. Some people go even further and steal things and then return them for cash. But I guess that on the whole, the good customer experience for the honest customers outweighs the cost of fraud.
EDIT: My apologies. It looks like I'll need to have a discussion with my friend about this.
1. Buy item #1, obtain receipt, take it home
2. Go back into store, find identical item #2, take it past checkout counter and up to return counter
3. "Return" item #2 using receipt for item #1
4. Profit
For big ticket items there's usually a unique serial the store will scan to prevent this sort of thing, but not always. Pretty deplorable.