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Seller kept my money. I didn't receive the item.

I contacted the seller to tell them I didn't receive my package. The seller has been very unprofessional, even implying that I was being dishonest because the tracking number showed it was delivered to me. Today the seller tells me that the package has been returned to them but won't issue me a refund. I opened a case with eBay but it won't give me the option to have eBay step in. It's been 2 weeks now. Did I just lose my money then?

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