First remember that your buyer may be right. He may not have received his item yet.
It takes about 10 to 20 days for a shipment from Canada to arrive on a US buyer's doorstep. Since most Americans expect USPS to be faster than that, he may be complaining too soon, but that is not a falsehood, just a false expectation.
Did you use tracking?
If you did not, and 20 days have passed, you probably should refund your buyer and ask politely that he return the refund, using Paypal's Send Money feature when it arrives. Most honest buyers will.
If you used tracking you can tell him where it is at the moment. This may cool his jets.
Did you insure your item?
I use Cookie Jar Insurance which just means adding a few pennies to my asking price (some use shipping price) to cover the occasional claim. This works better in some categories than others.
Basically if you have a claim, you don't get your panties in a knot about truth or falsehood, you just refund (asking for the refund of the refund as above) and take the loss out of the Cookie Jar of pennies.
There are also third party insurers like shipinsurance many posters speak highly of their service.
If you get all upset about the claim and have no proof of delivery and then refuse to refund, Paypal will refund the buyer. Then PP comes after you for the money. So you are out product and money.
But it doesn't end there.
You will have a black mark on your selling account. This could lead to loss of discounts, fewer invitations to promotional discounts, restriction on the number and value of the items you offer, and even if it happens often enough, not being allowed to sell on eBay.
And that's not counting feedback and Detailed Seller Ratings.
Is your opinion worth your business?
