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I had same problem/
Guy bought a phone brand new of me in ebay, ATT locked
Leaves positive feedback, agrees the phone is in brand new condition on Ebay
opens up a case 60 days later on paypal saying phone is locked and doesnt work in bahamas sends it back 93 days later all used up.
Paypal withdraws the money from me.
Yeah, basically its one persons word against anothers.
So if the buyer had sent the correct item back but you wanted to get out of refunding then it would be unfair for paypal to just believe you and stop a buyers refund because you said another item had been returned.
Basically if the buyer has trackable proof of a return then they win back their refund.
If you have SUBSTANTIAL proof that they returned an alternate item ie weight of item differs a lot or you have other evidence then you may win an appeal, failing that its between you and the buyer and you have the option of a small claims court action if available in your country.