I hope someone can advise...

I had an item of clothing listed on eBay, which I removed to keep for myself. Someone e-mailed me asking if they could still buy it. As it was still in the original condition, I agreed and invoiced them through PayPal (not eBay). They got it and insisted it had been heavily worn which it absolutely hadn't; the tags were even still intact. Anyway, after the case being opened and giving them my side of the story, I've heard nothing for about a month but logged on yesterday to check on it and PayPal have advised the buyer that I will issue a refund if the item is returned, which I told the seller I would not do as the item was not in the condition they were claiming it to be.

What should I do? I have no way now of submitting any comments to the case and PayPal are hopeless to get in touch with. The buyer has posted the item and made PayPal aware of the tracking number. Apparently after 10 days PayPal will automatically refund the money if the tracking shows it to have been delivered.

I might be wrong but I thought there was a law for private sellers under which they are not legally obliged to offer returns. Plus the item was sold outside of eBay so it's basically my word against theirs, and the listing was removed so it's not as if the transaction is linked to a listing.

Please help!