Assuming they sent the money using the "goods and services" option, you shipped the item to them and then they opened a dispute requesting a refund for "item not as described", your account will be limited until the "dispute" is settled or closed - if the dispute is elevated to a claim, then PayPal will decide if the buyer should get a refund - should that happen, PayPal will ask the buyer to return the item and they will refund the money. Unfortunately, not all buyers are kind enough to return an item and will provide a fake tracking number, PayPal sees the tracking info assuming the item is being returned and moves forward with refunding the money. (There's not much you can do other than provide any details or info that PayPal requests from you during their review and hope that the item is actually returned to you.)
