Should I refund after it has been worn?

Hi everyone, buyer purchased jewellery from me 2 weeks ago and complained she wasn't happy with the quality. I asked her to send it back and I will give her a refund. When I received it, the 2 pieces of jewellery has faded and tattered and looked like she has worn them swimming. I can't justify giving her a full refund as I can't resell the jewellery. I need to ask whether she can open a case with paypal/ebay to get her refund if I refuse? thanks.

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