Sent an order via large letter (so no tracking) worth under $20.

Buyer says they didn't receive it. Ordinarily, I'd send a replacement, but she bought the last one in stock.

So, I need to refund my buyer. Questions:

Should I ask her to open an INR case, and then refund, and by doing this, will I receive a defect?

Alternatively, I was just going to refund her payment directly from Paypal (she's a repeat buyer and I trust her) - but I remember I did this a LONG time ago for another buyer, and I THINK I received an automatic "out of stock" defect on eBay because I refunded the payment. Has anyone refunded a buyer's payment in full any time lately, and did you get a defect?

If I get a defect then so be it, but I'd like to avoid it if possible.

Thanks.