I would suggest your buyer send you back the camera for evaluation. If you find it has problems it didn't have when you sent it out, look for signs of abuse or mishandling that might have caused the problems. If it is malfunctioning now, and it wasn't before, it's up to you to offer a full or partial refund based upon whether there are signs of abuse.
At least you'll have the camera in your hands, like any store would, on evaluating an item for a refund.
If you can't find anything wrong with it, just refund the person's money and put it back up on Ebay for sale. Some people will find fault whatever, and it's not worth wasting energy in that direction.
All my Ebay sales stipulate no refund, but I always include a note in the box which says I'll be happy to do a 100% refund, minus shipping costs, but within a 3-5 day time limit of the customer receiving the item. The intent is that once someone receives an item, they must
evaluate that it is to their satisfaction immediately ... I'm not responsible for damage that might come from their use or whatever beyond a couple of days for evaluation. So far, only one buyer has returned an item out of the hundreds of sales I've made, and he later emailed me asking if I'd sell it to him again as he realized he was incorrect in his complaint when he looked at two others of the same item.
Running a store is a PITA.
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Godfrey
http://godfreydigiorgi.posterous.com