Hi jyeni  🙂

Firstly, I cant see the bag you are talking about under your ebay id, so I am guessing you sold it under a different ebay id? I was going to look at your original listing.

What I would do is check your buyers feedback. Look to see what kind of feedback she gives others. This might be a ritual habit of hers... you never know.
If it all seem geniune and she appears to be a honest buyer, then she would need to initiate the INAD (Item not as described) case, so you can respond to it... then Paypal will direct you and her through the correct proceedure.

I personally, wouldnt just refund for the sake of it, as she would still be able to leave you a neg/neutral feedback if it doesnt go through the proper channels.

Eitherway, when a refund is given (providing you have the bag back and you can tell it hasnt been mutilated by her or her dog!!) issuing a refund will be the total cost of the bag regardless of what it cost you for postage. You sold it free postage, so you cant claim it now.

She is responsible for return postage. If you are feeling generous, you can cover her return costs during the paypal refund.

best of luck.  🙂