The fact is, if a buyer wants to back out, there is very little you can do about it. Legitimate or not, if the buyer opens a PayPal case and claims the item was counterfeit, you would have to refund the money anyway AND you could also be out the item.
Arguing with the buyer will not get you anywhere. Sure, it sucks, but just do as the buyer asks and move on. This buyer sounds like a problem anyway - you are probably lucky this happened NOW, before the item was shipped.
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