Sears built the reputation of Craftsman tools based on their unconditional lifetime guarantee; They also created a cottage industry of people searching yard sales, thrift stores and scrapyards for rusted old tools. A British clothing retailer (Marks & Spencer) was famous for an extremely liberal refund policy, which also made them a magnet for shoplifters and petty fraudsters.

I'm sure Amazon know how much this sort of fraud is costing them. I'm sure they've calculated that it's worth the cost, at least for now. Shrinkage is just another cost of doing business.