A buyer recently asked to return a large Lego set they bought on BrickLink. The box was literally perfect when I sent it in the snug 'frustration free' cardboard box.As you can see, it did get a bit damaged in transit, but (to me) it's nowhere near "pretty beat up" as the buyer described. 

Of course, accepting the return means I'd be out selling fees and round-trip shipping, which totals around $60. Recognizing this, I offered him a small discount. He rejected and filed a claim with PayPal. The individual is apparently a reseller who is uninterested in less-than-perfect boxes. I am expecting PayPal will side with buyer because it seems like that's eBay's default.  

So what would you have done? How much of a discount would you have offered, or would you have just accepted the return request? Do you have anything in your store's terms and/or the item listings to head off such situation?

Incidentally, do you ship the frustration-free packaged box in a second box? 

Unrelated, have you seen a large increase in buyers ghosting after invoice; particularly those with minimal feedback? Typically, I just cancel the order and put the item back into inventory. Do you leave negative feeback?

The standard of BL should be B2C which of course this meets. Vigorously defend yourself here. Although, it's rep dependent over st Paypal. No one can predict.

Thanks much for the response. I'm hopeful that an actual human reviews the case. The only other time I have had an issue was with a buyer on eBay (an outright fraud situation) and their system automatically ruled in favor of the buyer within seconds. Because of that eBay experience, I pretty much exclusively sell on Bricklink where there seemed to be a better clientele.