Don't refund until you get the item back. If the complaint is that the item is not as described (including damaged in transit) you need to send a prepaid shipping label. Otherwise returns are governed by your Returns section you set up in that listing.
Once you've refunded you have no real way to force the buyer to return the item or the refund. Theoretically you could sue him/her in a court with jurisdiction over him/her, but that is almost never practical.
