Having a refund policy in place is good business and helps the buyer to know that if something goes wrong, they are looked after well. I generally will find out what the problem is first, then offer possible solutions to the customer, but sometimes you still need to issue a refund. It's one of those things where you put yourself into their position as a buyer and imagine what and how you would feel if something doesn't go right, you lose money to someone who you don't know personally. Like the saying goes "Treat others as you want to be treated".