I received two defective items within months a couple of years ago. One was a Marmot tent that had hundreds of little holes in the bug netting throughout the whole tent. Besides that detail it did not look used. The other was a North Face backpack that had almost all of its straps and buckles sewn on backwards. Functionally it still worked (with some annoyance), but it was supposed to be a gift and I wasn't comfortable gifting it that way. Both were ordered online so I wasn't able to check them out beforehand.
I wasn't in the country at the moment so I wasn't able to look at them and exchange them for a while. I didn't wait even close to a year, though. Returning them in the store wasn't difficult, but it also left a bad taste in my mouth because I could tell the cashiers weren't pleased about the returns. Both were unused. For the backpack, the manager said she "didn't really want to give me a refund" but offered me store credit. What, she just didn't "feel like it"? I didn't want to argue and just took it.
I haven't returned anything else. I think the current policy is more than fair. I don't understand how some really nastily used items are still showing up at the stores, though. I haven't noticed a functional change in the returns they accept and put out for a marked down price.