Return Requested, not sure how to handle it

[creativdep59]

Question before background:  I've never dealt with this before, but do I let a Return Request expire or do I initiate one of the three Actions: Issue refund, contact buyer (which I did), report buyer.  I can see nowhere that he escalated his claim.

I'll try to keep this simple as I can.  A buyer was not happy with a bottle of pet shampoo he used, said it didn't work, but another type he purchased on eBay did.  He initiated a return request.  I asked how much he used so I could determine a fair credit on his purchase. He proceeded to say I pictured THREE, 4-ounce bottles, but he only received ONE, 12-ounce bottle. So if it HAD been the three bottles, he used about half of one, so NOW will I authorize his return.  So I did some math and decided that if he used one sixth of the bottle I'd give him a $2 credit and told him he could either keep the bottle or donate it to a local rescue who would be happy to have it.  Shipping is nearly $5 which is offered 'free' and it seems silly to pay for return shipping and give him $11.99 back.  After that I have heard nothing.  Paypal funds are on hold.

Another buyer wasn't happy about the product and left neg, and I got another message yelling at me for picturing three bottles instead of one, if I was just selling one (he bought a bottle six weeks ago).  I get it already, and will change my photo, but I feel sorry for all you sellers who sell retail type merchandise, yikes!!!