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Paypals policy change to keep its fees on refunds is extremely poor business practice. Not even credit card merchant facilities do this, so no it does NOT align with normal industry practices. Paypal is an expensive way to collect payments from customers, now its non-viable. Good job running their business to the ground, for me this was the nail in the coffin. I will not be forced to shoulder the explanations to customers of why they can't receive a full refund, oh and what about accidental purchases? It opens up businesses to all kinds of exposure, thanks but no thanks paypal. I'll be removing paypal option from all my sites and ensure customers do not pay through them over this.
I have now made a refund, and can confirm.
If you refund something, you have to cover the fee amount in the refund.
What a massive rip off.
I guess everybody will just put up with it...