I have had orders where they have refused to refund. When I have later, internally, escalated, they have relented and issued a refund.
There is even a dedicated section (can't recall if on inside.amazon.com or the wiki ) to explain the process of how to internally escalate a bad customer support experience on behalf of your friends and family.
If Amazon (retail) is as customer focused as they claim to be this should not be necessary.
I've been a customer since 2000 and an employee for a while now.
Disclaimer: I hear in the US it is totally different and support is a lot better.
Unfortunetly I know a few people who have been abusing Amazon's refund policy recently. I don't come from the best background so I know a few people who have ordered phones and other electrics from Amazon just because they know if they complain they were stolen from their doorstep they might get a free phone. From my experience working at ecomerce and insurance companies it's hard to have a relaxed returns policy when you also have to accept that the majority of the claims will be fraudulent.