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Refunded Customer Reverts to Unpaid

Through Paypal I recenlty gave a customer a full refund on their order. This item was shipped, but did not suit the customer's needs. 

The Ebay system now shows this order as being unpaid and is telling me to open a case.  How do I get rid of this notice to open a case against this good customer?

Also, I would like to know why we are unable to refund orders directly through Ebay?

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