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Four different online articles on how to reject a job offer during the interview process made similar points, and what they came down to was as simple and noble as "be nice." This isn't as easy as it sounds. When you're looking for a job, your stress levels are probably pretty high, and you're spending a lot of time thinking about your own situation. Being nice requires thinking about others: the headhunter or job placement executives that helped you get the interview, your interviewer, and anyone else you had contact with at the company.
Say No Promptly
Say "no" as soon as you know. Sometimes you'll realize even before you get to the interview that you and the company aren't a good fit. Or, it may be that you've gotten a better offer elsewhere after your interview was scheduled. At other times, it won't be until after the interview or the offer that you realize this isn't the job you want. Whenever you know you're not taking it, inform the company promptly. It's not going to be any easier saying no later. Also, as a ''Forbes'' article on the subject points out, if they were turning you down instead, wouldn't you want to know promptly?
Be open and honest with your contacts at the company about the reasons you're declining the job. HR execs get turned down all the time, and they won't take it personally. If you give specific reasons for the turn-down, they can report these up the command chain, and it may help them tailor future offers to the job market. Another aspect of the turn-down that more than one article mentions is that it's rude to turn down the offer in an email, a phone or text message or (horrors!) with a tweet. Personal contact is important, and helps leave the door open. Who knows? You may be applying for another job with the same company or the same HR exec in the future.
Be Appreciative and Kind
There are things about the company you like, or you wouldn't have applied for their job. In your turn-down phone call, don't fail to mention what these good things are. "You know, it was a hard decision, because I think it's a great company and I felt very comfortable with everyone I met," is the general idea.
There was an era in American society where, after a social call, you followed up with a handwritten thank you letter. Society may have moved beyond that, for better or worse, but after you've turned down the offer, follow up with an email to everyone you came in contact with. It doesn't need to be long or explanatory. "Thanks for the time you spent with me. I appreciated it, and I hope we'll have an opportunity to work together in the future," is the gist of it.