It's possible that Amazon has some algorithm that decides whether a product is worth returning or not, and that they just tell you to keep the product since the cost of return handling, etc., would consume the margin they'd make reselling it. I'm not sure if this type of algorithm would be applicable to FBA sellers, but I doubt Amazon would want it to be, since they'd lose out on the opportunity to collect additional handling fees from the seller.

Just conjecture at this point as I don't think any non-Amazon employee could know exactly all the details around when Amazon decides to charge a return handling fee, etc. I guess this may be in the fine print somewhere, but I would rather expect the fine print just to say "We can charge you a return handling fee if we want".

My experience is that I tried to return something last year, and Amazon was going to dock 12 dollars of my 14 dollar refund for return shipping if I clicked anything other than "defective". The product wasn't defective so I just decided to keep it, not worth the hassle for a $2 refund.

Did you order from a third-party FBA seller? If you did, they will often tell unsatisfied customers to keep the product and issue a refund anyway, because they'd rather be out one unit than have a return against them.

It wasn't from FBA, sold by Amazon itself.