It is very eassy to avoid this by listing in a way that buyers either have to pay for delivery or they have to pay cash on pick up but if you offered Paypal and had pick up as a delivery option then you had absolutely no grounds for cancelling the Paypal payment and could not ask for any extra payment unless the buyer asked for delivery and agreed to pay extra.

If you sent a request to mutually cancel and the buyer did not respond then after 7 days you would be able to close it and get the FVF refund, you only lose it if the buyer ticks the box to say they do not agree to cancel.