Jajas - Most shops do the "no likee -full refund" thing because ... well, because they just do. It's discretionary.
I'm old enough to remember it starting - and I was amazed.
It has the effect of making people buy more - supposedly. In ye olde days, people would spend a long time pondering a purchase, and then go in one week, and spend their pennies on the one item. Nowadays, we go shopping as a leisure pursuit, and buy lots of things, even things we're "not sure" about, because, in theory, we can return them.
Of course, lots of people never get round to returning things.
And of course, nowadays many shops have something mad like a three to six week turnaround for stock. You can't spend weeks deliberating a purchase - it'll be gone.
And then there's the whole "unpick a seam" issue. If shops won't give a refund without a fault ... well then, some people really will get creative if they reallly, really don't like something.
But it seems that all this "borrow this item for three weeks/a month, and see if you like it" policy is on its way out. All Saints may well be an early indicator of a trend.
I'll be sad if the three weeks returns policy goes, though. I'm a terrible procrastinator, and will buy nothing. 