I echo Richard's concerns, and I've wondered too how to deal with returns when you sell online including on LTG.
You want to be reasonable and fair of course, but if something is going to happen to a guitar, it's most likely going to happen in transit.
If I sell a guitar, I'd rather not have it in the hands of UPS, or FedEx, or whoever, any more than necessary. So when I sell stuff online, I too click the "No Returns" box, knowing that if the buyer has a legitimate issue, I'll most likely willingly accept the return, and Reverb and eBay will support the buyer in any case, unless there is obvious fraud or something like that. And I try to make my ads as comprehensive as possible, the photos complete and detailed. And I overpack the instruments before shipping.
But sometimes you just can't win. I sold a century-old banjo some years ago. The original neck had a dark spot on it, probably a partial knothole. It didn't effect anything -- the neck was as solid as a Louisville Slugger -- the knothole had been there for more than 100 years, it was pictured in the photographs, etc.
After getting it, the seller submitted a return request, and when I asked what the problem was, he said the neck had an "undisclosed imperfection"; when I asked what it was, he cited the partial knothole. I felt pretty sure the seller just didn't fall in love with the banjo and so was looking for any excuse to return it and this was the best he could come up with. I sighed and took it back.
A buyer of an old Hagstrom archtop I had, in nearly mint condition (also sold on eBay), claimed when he got it that the guitar was "a wreck," and that the damage didn't happen in transit, implying that I'd misrepresented it. He said he'd keep it, but he wanted a substantial refund on his purchase price. That raised red flags and in the process of trying to sort things out (this was in the early days of eBay), he offered to take the guitar to his local guitar repair shop, who would be unbiased and could confirm everything he claimed. I looked up the shop online. They'd been in business for 30 years, had a great rep, seemed completely kosher and unlikely to risk their reputation making a false evaluation. I agreed to call them.
When we talked, they described a litany of problems -- the top was collapsed, the braces were loose or missing, one of the pickups didn't work, and several other things were wrong with it. In the course of our conversation, I finally said, in exasperation, "I can't believe we're talking about the same guitar. What I sent this guy was a sunburst Hagstrom in nearly mint condition." There was a pause. Then the person I was speaking to shouted to whoever he shared the shop with, "Hey, was that Hagstrom a sunburst?" Longer pause. Then the reply, "Tell him we'll call him back."
Turned out the guy who bought my guitar had the same model Hagstrom as mine, but his was in terrible condition, and that was the one he gave to the shop for evaluation! The only thing was, his wasn't a sunburst. I still ended up having to take my guitar back (in spite of calling eBay, reporting the guy, and explaining what had happened), but the aggravation, time, and expense involved kind of sours you and makes you wary.
That said, most of my experiences on eBay have been positive, as have (almost!) all my experiences on LTG.
We had a flood in our house a year or so back and had to have all new floors put in. We have a small place, and in the course of moving (literally!) every single thing we own I began questioning the wisdom of having so many damn guitars!
So I have a bunch I'm looking to sell, including 20 or 30 Guilds. But I've been offering them mainly on my local Craigslist, where people can see a given instrument in person, both parties are satisfied before money changes hands, and the guitars aren't at the mercy of the shipping companies.
Glenn