Same as modee here. I always won cases as a seller.
Buyer simply has to return the item or else they will loose.
BUT, you must have a tracking number to present to PayPal, they need it to know that you shipped the item to the buyer. If you have tracking number, you are golden. Buyer files a dispute with PayPal, go ahead and add your comment and tracking number, and immediately escalate to a dispute. In a few days paypal will give you an option to refund money after item is returned.
Then buyer has to return it if he wants money refunded.
Now, this does not mean buyer can not win. He or she can easily win if they call credit card company and file a chargeback.
I think, I think, paypal will cover your loss if you are covered by their paypal protection policy. But I'm not sure, because I never had a buyer file a chargeback.
Anyway, you can't be running a successful business by kissing butt of every dissatisfied buyer. It is your policy that item is returned, stick to it. Like someone suggested here, I'd get google checkout, or better yet a merchant account.
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