HannahsMummy
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If she opens an ebay or paypal case they will tell her to send the item back to you tracked (I have an ebay shop so know a bit about it). You will not need to refund her until you get the item back, and if paypal do put a hold on the funds or refund her, you can appeal by saying that you have not had the item.
You do not have to refund the return postage costs unless you're a business seller.
You do not have to refund the return postage costs unless you're a business seller.