Many flags there; never refund before you get the item back. Regardless of whether you or they are paying. Refund on return means there has to be a return.

There is not much you can do if you've given her her money back. All you can do is rely on her having a trace of morality.

Also, at least anecdotally, a satchel sitting in a courier's van for the best part of a day will smell exactly like dead cigarettes. So I've been told, I smoke so...

I'm afraid you have probably been dudded. Never refund until you have the item back, or decide it's not worth returning.