More recently there was a sting, and several Gamestop employees were fired for knowingly taking stolen games.
As a Gamestop employee myself, I actually have to agree with Cyberxion. No, there's no way they can file a lawsuit. We have the right to refuse service to anybody, regardless of our reason. Technically, while it would obviously be rude, we could even refuse service simply because we think they're ugly, or perhaps they smell bad. Where my store is located, the latter is actually a pretty valid excuse, as people come in smelling very strongly of pot fairly regularly and disturb the other customers. This is the advantage of working in retail, you really can refuse service for ANY reason. The only people you really have to deal with are the ones at corporate.
Besides, stolen games are usually fairly easy to recognize. Multiple copies of the same game (especially more than two), particularly games that were just released. Games still in their packaging, fairly common as well. There's a reason why we're supposed to casually slip in a question regarding the reason they're trading it in, you can catch a lot of people that way. I've had people tell me that they just didn't like the game when it was still shrinkwrapped. Red flag anyone? Generally, if you have any reason at all to think that a game, or even a piece of hardware, may be stolen, it's better to be safe than sorry. Maybe you're wrong, maybe it's all perfectly legal, but it's not risking your job over. Good employees make smart judgement calls. Bad ones get made into examples.
Gonna hop past that wall of text there and just toss up an explanation. Not at all defending Gamestop's policies, just mentioning how they work it.
Yes, there is a way to look up the transaction in store, but in a very limited manner. We have no way to "search" for certain information, we have to dig through it all by hand. That generally means that to narrow it down, first we need to know what register the product was purchased from. Then we need to know what day. Then we need to know about the general time frame, and of course cash or credit doesn't hurt either. Of course, if the gift wasn't bought at our store at all, then you're considered out of luck. Some stores will actually take the time to attempt to find and print out a store receipt and use that to do the return, but it also depends on how busy they are. I can tell you personally, the after-Christmas rush until New Years' is almost as bad as Christmas shopping itself, only now you're dealing with returns. So, if there's a line going out the door and you're asking us to search for a transaction from a time period in which we could potentially have 500 transactions per register, we're going to have to ask you to step aside.
You also have to look at it from Gamestop's view as much as your own. Gamestop corporate has a strict policy against repackaging items. It took them several years just to agree to let people return opened new accessories WITH a receipt. They really don't like selling a used product as new. In this particular case it was a different issue, but the point remains. While other stores, like say Wal-Mart, have no issue repackaging returns, we do. This is mostly because we get people from the other side of the equation who will bring back an item saying that it doesn't look new, and cause a fuss about it. The most recent example, take the Batman: Arkham Asylum collector's edition, sold in many stores just this morning at midnight. Our manager set up a display copy (which I believe was actually his own reserve) to show people what it looked like. The model batarang that came with it was scratched all to hell, maybe they tried to make it look battle worn but it just looked horrible. In any case, several people returned to the store after buying their copies, saying that the batarang looked like it was already used. The best we can do is explain that it came that way, and all of them are like that.
I'm running off on a tangent. In any case, I can't really tell you why we don't usually do store credit returns. Sometimes we do honestly, but very rarely. We have a "No Receipt" button on the returns screen for a reason, we just don't like to use it very often. Any return using that option is supposed to be placed on a gift card as store credit only, never anything else. As I said above, during Christmas there is way too much information for us to try and sift through by hand. You'd think they'd add in an option to search, but apparently haven't gotten around to it yet. In any case, most stores will, if it's fairly obvious it was a gift, use that option and go ahead with a credited return.
I guess the only thing I can really tell you is that your particular store needs to be taught some customer service. :P That in itself, due pretty much to what Cyberxion said above in his... second paragraph, pretty much explains the entire problem. Those people just need to get off their high horse, suck it up, and hit the scary button.