To or to not refund beyond Return Window?

This has been a big discussion within the company I work for as of late, and neither side is making any headway on finding a solid answer.

When we receive returned products, especially ones beyond the return window, we are being encouraged to give a full refund, plus an additional $20 on occasion, to keep the customer from writing anything negative about us or their experience anywhere on the Internet.

Are we even supposed to give anything back outside of the return window? It feels to me like it’s going to encourage people to continue to “rent” our products and just mail them back after many months in a condition that is borderline unsellable because they know they’ll just get their money back. It feels like we’re throwing money to the void.

I’m unable to find anything on this in Amazon’s policy pages. Would love to hear insight from other sellers.