It seemed like PayPal was going to rule in their favor, because they presented the same 2 unacceptable offers: 1/3rd refund + a coupon, or return the item to China for a full refund. What saved me is someone told me about Paypal's return shipping refund policy. They will refund your return shipping cost up to $30. Technically they should have just given me a refund without having to return it, since the transaction was obviously a scam. In the end, I got the item back because it was refused at delivery in Hong Kong, and Paypal refunded me because the clock ran out on the dispute. My tracking info proved that the item was returned and refused.