I been buying their pre owned games and then returning back to them for refund because it helps me save money instead going to video store and rent them.
They can if they catch on you're abusing their return policy. If you keep going to the same store they'll probably recognize you after the first couple times. People who work retail aren't brain dead.
when they notice you are doing it they will because its fraud and they could have you arrested if they wanted to are you really so cheap you can't afford to buy a few used games and would risk a felony record for this ?
probably not. chances are they don't even recognize you, unless you're doing this on a weekly basis. however, if enough people do this, they may change their return policy.
If they do ban you, it would be highly unethical and stupid. They aren't losing any money so they have no reason to ban you. If they ban you, you could always take one of their surveys and/or report them to a higher corporate office. If all else fails you could threaten to sue...