That's good information to know but I can't see it as a scam.
I think they would be foolish to deny refunds to someone who bought an item that was wrongly described in a meaningful way (notwithstanding their verbiage in the TOS). They would get terrible PR if they say "too bad, so sad" to a customer who bought an item described as working on 120V but it actually requires 220V. But I can see the logic in having that restriction so you can deny returns to someone who waived the return privilege and wanted to return something because "it looked more blue in the picture".
They can't actually limit resales of course, they just want to be able to cancel memberships of customers who they suspect of doing it. And if they plan to undercut Amazon they would have to defend against people buying stuff cheap only to put it on Amazon to resell. I remember a thread at FWF where a guy got blacklisted by Macy's for buying stuff and reselling it and they didn't have any such clause in their T&Cs. They just said he can't shop there any more. I guess you can fire a customer if you want.
Looks like they want to be like the Spirit Airlines of online retail - no frills, low cost, make sure you know what you want when you buy it. There are lots of occasions that would work OK for me - I know what I want, I don't need to return it, I am not in a big hurry, and they have the cheapest price.