Because the seller takes Paypal and that agreement trumps the seller's preference.
If an unhappy buyer asks for a refund, the seller is best off agreeing and asking for the item to be returned for a full refund.
RETURN-- because the buyer is required (Standard Practice) to pay for the return. This discourages returns for Buyer Remorse. If the item is badly damaged, some sellers will accept a photo.
Remember that the shipper may refund on damages incurred in transit, provided the item was well packaged.
FULL REFUND- is the original payment. The seller can also refund the return postage (Best Practice) is he realizes the problem was his error, for example poor packaging or a mis- description.
If the buyer paid for a red sweater and got a cherry sweater instead of a scarlet sweater, that's Buyer Remorse. If he paid for a red sweater and got a blue sweater, that's Seller Error.
If a seller refuses returns or refunds, he is accepting that honest buyers will read his unfriendly terms of sale and backbutton. Meanwhile, the cagey buyer may make the purchase, knowing that those ToS are unenforceable. And that second group are going to be harder to deal with than someone from the first group.
The buyer has the Resolution Centre, the eBay and PP Buyer Protection policies, feedback and Detailed Seller Ratings on his side.