Under $10 I'd probably refund just to not spend mental energy worrying about it.
So far I've only had 1 problem as a very occasional seller on ebay and it was a laptop LCD screen that I sold and when the buyer received it, it was bent (but not broken). He claimed it didn't work but I doubt he tried it. I had $50 insurance (priority mail) and I think I sold it for $60 or $75 including shipping. I salvaged the screen from a dead laptop anyway, so no real $$ out of my pocket. I refunded the dude his $ and got my $50 from the post office after filing a simple claim.
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (4, 10, and 11).