I offered her a full refund upon returning these to me. She queried the fact that she should pay postage back. I told her items could be packed flat and posted for $1.80 in an A4 envelope, so hardly any cost to her.

Buyers generally do not like to be out of pocket on a purchase if there is a fault with the item, and I personally cover all expenses if there is a problem (depending on the circumstances, I either offer to send a pre-paid and addressed satchel, or provide a full refund + the cost of return post when I receive it back). I'm not saying you "deserve" the neg, nor making any other assumptions about yourself or the buyer, but in general not offering to cover return postage in such situations is a sure way to get a buyer off-side, particularly as, if they had planned to use the item for a certain event or can't easily replace it quickly and at similar cost, they have already spent time in purchasing, waiting for arrival, then posting it back, with nothing to show for it - understanding the buyer's perspective, is, in my opinion, the key to knowing how to respond to issues like this.

If you have any doubts about a buyer's claim that the item is faulty, you can always request a photo of the damage before deciding what to do - if I want to see a photo, I usually just ask them to send a pic so that I can assess the damage and work out the most appropriate option(s) to offer (which will usually be replacement partial refund if it's still usable and they want to keep it, or full refund on return, and only ask that items be returned if they don't have any use for it but I do...)