I am surprised that a person with such experience in trading leads as long discussion irritating their customers more and more, rather than just give them his money.
The customer satisfaction should not be the first place? If he asking for a refund money I'd sent the money. Zero anger and a chance to be the next satisfied customer.
Sometimes, simple solution are best solution. Maybe generate sometime little lost, but result are worth it.

About reputation.
In my opinion is not good practice to spoil the reputation of the person whom he did not interest. For something different reputation system is designed.

I shudder to write something more, because my reputation will go to hell