This happened to me once. Supposedly the address was fine. I'm not sure why it came back. I ended up sending it out again to another address (which makes me wonder, did they really give me the WRONG address in the first place?). Yes, I paid for the return out of my pocket, and yes I paid to send the parcel back out. Don't know if I technically should have, as I was obviously out a lot of money. But, I didn't have a policy stated for this instance, and I figured it was my responsibility to get the parcel to the buyer.
It has only happened once luckily, so I figured it was just an expense I had to eat up.
Good luck with that- I'm curious to know what you come up with as a solution!