what happens when a buyer returns an item but it is damaged and i am still forced to refund their mo

[mouseyonair]

buyer purchased a phone from me and said it was damaged - because it had spots in the camera.  I agreed to the return, but now the phone was returned to me - they activated it in a foreign language and I can do nothing with it.  It is $500 we are talking about - and I am frustrated because I cannot speak with anyone from ebay and they are requiring me to give them $500 and take a loss on my product.  I am so unhappy.

[disneyshopper]

You had no returns on that item, so you had to accept the return because the buyer said it was damaged.  If you were a top rated seller with 30 days return policy, you could withhold up to 50% of the refund because the item was not returned in the same condition as sent.  Issue the refund, and then you can write it off on your Schedule C when you file your federal tax return.