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Customer Returned Item Outside Return Window Demanding Refund

We sell a higher priced consumer good and recently had a customer buy two of them worth over $700 total.

22 days after delivery we received an email request from this customer explaining that he didn't like the products and wanted to return them. We responded with the appropriate instructions, return address, and rules for eligibility.

As part of our policy, returns need to be received no more than 30 days after delivery to be eligible for return. The customer did not respond to our return instructions email for another week, which happened to be 2 days after when we needed to receive the return for it to be eligible for a refund.

If they had just sent the product when we first sent the instructions, we still would have accepted the return even if it had been received past the window. The issue is that they had ample time to return and make it work, but chose not to.

We explained that the goods were no longer eligible for a refund because he waited too long to return. The customer got very upset and then threatened us with legal action if we did not accept his return and refund.

We sent a detailed email explaining our return policy, how it's listed on multiple parts of our website, and detailed in the return instructions that we provided when they first reached out. They further threatened us and bashed us on our customer service, and explained they were going to send back the products immediately and demanded the refund once received by us.

Our final message to him was reiterating our policy and the enforcement of that policy as well as strongly urging him not to send the product back as he would lose out on the shipping cost and we would not be refunding.

Well, today we received their returned product…

Now my question is, are we better off calling FedEx and refusing the return, which would result in FedEx sending it back to him at sender's expense? Or do we just ignore it and act like it never happened?

As he paid with PayPal, my assumption is that they'll open up a dispute and I want to know if refusing the return (sending the product back to him) will help us during the documentation process? Anyone deal with similar issue before?

TL;DR
Customer bought $700+ worth of goods and wanted a refund. We provided instructions to return. They waited too long despite knowing the policy and then demanded a refund. We told them no longer eligible and not to send back. They sent back anyway. Do we refuse the return or just remain quiet?

submitted by /u/nycguy56
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