Standard practice is to establish a time limit for returns. In addition, prudence-as well as the pertinent MLM and Party Plan regulations-suggests that you have a sound basis for not accepting product which has been used or damaged (other than by shipping considerations), or is outdated or expired, and is otherwise not resalable.
The law requires that you purchase back product from a canceling distributor if the product is in resalable condition, and if the product was purchased within 90 days of the requested refund. The refund can be adjusted for as much as 10% for handling and re-stocking, less any commissions or rebates paid to the distributor returning the products. This is a standard provision that will appear in your distributor agreement and company policies and procedures. (If not, quickly get in touch with an MLM attorney specializing in our industry.)