It wouldn't sit well with me that I had the money back and the buyer received nothing, especially when they could have done what most would have done and gone through Paypal.

Annoying to be out so much money but if you divided the amount between all the parcels you have successfully delivered over the years I suspect it would only work out a few cents per parcel.

In fact although I rarely have anything not turn up I do designate a small sum from each payment as a slush fund which I would use to cover the occasional refund.  As I so rarely use it I build up a nice little sum which will pay for a meal out or some other treat and still leave enough to cover two average payments.