And it works because people are very reluctant to give up things they own, even if they don't find them useful.

Well in many cases the actual cost of the product was covered in the "Shipping & Processing Fee". To return the product the customer would have to pay the shipping back as well. Sometimes they say they'll pay shipping back, but they've probably accounted for this by making a higher initial shipping cost or making a it a pain in the butt to return or just by conveniently "going out of business" after a month or two.