From my recent experience, I found that when refunding buyers, ebay is misleading to sellers. Here's what I mean: When you select "cancel transaction", it then asks you to chooses the reason why. You have 2 choices: 1) due to being out of stock or 2) buyer requested refund or shipping address problem If you choose option 1, you'll get a strike on your account and you may get your account banned, suspended for refunding the customer. Ebay doesn't tell you this with a subtle warning message before you select that option, so you would have to know this ahead of time. If you select option 2, there is no strike on your performance rating. My question is, what is the best way to refund buyers? Would refunding from the paypal account be better and safer than refunding on ebay's site? From my memory, when sending a refund back to a buyer in Paypal, they don't ask you for a reason. You can just send them a refund and there's no strike against your ebay seller performance rating. The last thing is, you can't just refund the buyer without telling them. You have to have it in WRITING that they requested a refund. So, you have to ask your buyer to please write back to me stating that you want a refund lol. That way in the future, if you call ebay to resolve something, they will look in your account and see that the buyer requested a refund in writing. If you just refund them without any evidence that the buyer requested it, they count that against you if you ever try to appeal anything. Just letting you know since I talked on the phone with them for 40 minutes and they tell me this now. I didn't know about this before.