How can I issue a refund to a buyer if the money is still on hold due to a dispute?

[milopull]

Buyer opened a dispute because the item 'was not as described' so the payment is on hold. I want to send a "full refund with return of the item" but I am being asked to fund my account with the full refund amount. Is there a way to refund the money using the amount on hold? 

If not, and I fund my account and issue the refund, will paypal eventually return to me the money that is on hold i.e. the refund amount? 

I can't really afford to fund my account with the refund amount and then not be made whole in the end!

[PayPal_JonK]

Hello @milopull, 

Welcome to the PayPal Community Forum! I'm sorry to hear a transaction hasn't gone quite as you had expected. We wouldn't normally recommend sending a refund on a dispute before receiving the item back. You should be able to offer a refund upon return of the item in the Resolution Center after selecting "View" under "Action" next to your case.

After you receive the item back, if you refund a payment for goods or services, there are no fees to issue the refund, but the payment receiving fees aren’t returned. If your PayPal account doesn’t have enough money, we’ll request it from your primary bank account. In this case, it usually takes 3-5 business days for the refund to complete.

If you run into road-blocks responding to your case, please don't hesitate to reach out to our Customer Support teams for assistance. 

Good luck with this and future transactions!

 - Jon K