eBay is a tricky venue in this regard. In general business law, a mail-order merchant is responsible for the safe delivery of the purchased items, but on eBay the standard most used is "I'm not responsible for loss or damage during shipment, pay for insurance if you want it." This raises ongoing debates on eBay's Packaging & Shipping forum and endless situations for both sellers and buyers. The bottom line here is what kind of seller you want to be. If your auction terms clearly stated that you are not responsible for loss or damage in transit and you offered optional insurance, then you would be within your rights to say "sorry, you didn't purchase insurance, there's nothing I can do." On the other hand, if they paid through PayPal and/or with a credit card, they can still file a claim and get their money back that way, and they will almost certainly leave you poor feedback. The best sellers on eBay are consistently working to make sure their customers are happy. When I sell an item, I am prepared to make good on any damages during shipment, because I have a good repuation as a seller and want to keep my good feedback. If the item is pricey, I either require the buyer to purchase insurance or add the cost into my minimum bid. If it's a low-cost item, I simply pack it well and am prepared to refund if necessary. Sometimes I consider the buyer's feedback in making decisions; if there's any indication that they tend to make claims about damaged or lost goods, I may insure and get delivery confirmation at my own cost, just to avoid problems. In practical application, you really only have two main choices. You can tell the buyer that you're not responsible for the damage, and be prepared for potential claims and bad feedback, or you can make good on the damage. If you decide to make good on it, work with the buyer to find out what would satisfy them. Sometimes a partial refund will be adequate, but I wouldn't go that way with anyone who didn't have sterling feedback, as they may be saying it's damaged just to get some money back. In the case of a full refund or replacement, require the buyer to return the damaged item before making a refund or sending the replacement. Tell them to send the original packaging, also. (They may not have it any more, but until they tell you so assume that it's available.) Refund their final bid amount the using the same method they used to pay you. Whether you refund shipping for either the original or return shipment is something else you'll need to figure out. During all this, remain professional and polite. For more input, you might want to go to eBay's shipping forum and do some reading. This problem has come up many times and if you search on terms like "damage refund" you'll find many posts dealing with the subject. You can find the ebay Packaging & Shipping forum here: http://forums.ebay.com/db1/forum.jsp?forum=96

probably replace the item

The shipper needs to file a claim with the carrier.

The purchaser should be able to reasonably determine whether the item was securely packaged or not. If it was, the blame should go to the delivery service. If it wasn't securely packaged, then even though rough handling by the delivery service caused the damage, the ultimate responsibly goes to the seller for his lack of secure packaging.

FOR THE SAKE OF YOUR EBAY "rep"...have the buyer take a pic of the broken item, the pic focusing on the "broken" part, and e-mail it to you. Once the pic is received, refund his money in full. *** Even if you did package the item well, it might not have been well-enough packaged for shipping service ("carrier") mistreatment, especially during "the holiday season" when temporary employees with little experience are handling packages. Consider it a lesson...no matter how well-packaged a delicate item is, carriers can (and infrequently will) treat the package so badly that nothing can reasonably be expected to survive shipment (no matter how well-packaged). In my time I've had packages shipped TO me that were so badly mistreated by the shipping company that they were literally undeliverable, the carrier would not put it on a truck to leave the warehouse. (I.e. parts and/or liquid and/or glass and/or whatever leaking out of the broken package.) In such cases a trustworthy vendor will re-ship the lost item and file a loss claim with the carrier (if the carrier provides any such service to the shipping party).

Stop payment on your credit card.

Always charge enough to cover insurance.