Free returns is exactly what it is - free, no hassle and no questions asked returns. We do not charge you anything for it.
What we do is raise the international shipping costs in your hipshipper rate table by a certain percentage (20% at this time) so your buyers pay a slightly higher rate than if you were not using this feature.
In any case, this feature is free to the seller.
Enabling the Free Returns feature is done through our plugin. During that process, we update the shipping rate table/s in your eBay store with the new shipping prices and your store is marked on our database as using the free returns.
Later, when a new order comes in, you will also be charged that extra percentage.
For example - say that a certain item cost your buyer $100 to ship. we will charge you $95 for that shipment (deducting 5% to account for the paypal fees you paid for that transaction). After you enable the free returns, that same shipment would cost the customer $120 and we will charge you $114.
Basically - the only difference is that your shipping prices are slightly higher than before.