I agree that refunds are a fact of business life and the guarantee is a key component that improves conversions. It is called risk reversal where the customer has a comfort that you have confidence in your claims and product quality.

In any direct response campaign this is necessary, especially if you are not a known brand. Sure you can overcome this somewhat with a JV and co-branding, but nothing makes a prospect feel better about a purchase than a solid money back guarantee for any reason.

I also agree that the vast majority of customers are honest. The fact that many don't use the product and I've heard numbers as high as 90% for some business opportunities, is just a fact of our business model.

My personal opinion is that by adding conditions to the gurantee hurts your credibility and the value of your offer. Also you will avoid complaints by offering a clear and easy to execute money back policy.