Im getting tierd of customers returning items for a refund when items are smelly, dirty and used. I need some advice on this please.

A customer from the US messaged me and asked for a refund as the dress didn't suit her,  I said fine, send it back.  I received it today, and it is full of cats hair, which, obviously i can not sell.  I message her and said i can't refund her.  Do i send this item back to her, as it will cost me $10.  Or will she have to deposit $10 into my account?  Some advice would be great, I will not refund her as this item is not sellable, but i know, if she opens a case via paypal, she will probably win... Thanks for you time.

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