How do I go about this refund?

I had a buyer send a message that she had rejected the package on the item she had purchased. She said

"Im so sorry even though u have patterns in caps I didn't realize it was something completely different then what I thought I was buying untel after purchase"
 
The package has arrived back, unopened.
 
I don't want to just refund, she purchased and made a mistake, I don't want to get a defect or have to refund the postage.
 
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How do I go about this refund?

You can also ask the buyer to open a return request. You then accept the return and refund whatever amount you choose.

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How do I go about this refund?

I believe that a Refused package is no longer covered by the Money Back Guarantee.

Theoretically, you don't owe her a penny.

However, ethically you can't have both the payment and the item.

Refund the payment less your cost of shipping and your fees both eBay and Paypal.

Block her timewasting badonkadonk.

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How do I go about this refund?

You can also ask the buyer to open a return request. You then accept the return and refund whatever amount you choose.

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