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You know, I was going to say something along the lines of what you said - whose to say he didn't swap serial numbers and return a stolen one to you? If he says keep it, then keep it. You didn't break it, and I assume didn't demand it returned. If he gives you a hassle with feedback, just...

I also wouldn't worry about negative feedback. You have last say, and can easily counter in tone whatever feedback is left. If the guy rips you, you just state that the buyer tampered with and damaged the product, so you couldn't refund his money. If you keep it, it has been devalued. I'd send...

If the unit worked when you shipped it, and didn't when it was received, then, assuming your packing wasn't the fault, it got damaged in transit, and you should be pursuing the insurance claim. However, since the buyer tampered with it, you have no idea when it became nonfunctional (I'm...