Steve must be thick. There is no trial period when buying off an auction site or an online forum! Anyone above the age of 7 knows that. If it was broken, that would be one thing, but it clearly wasn't. If you want to buy something with Best Buy's policies, buy from Best Buy. He's clearly just trying to take advantage, especially with the veiled niceness in that email threat. This guy is clearly a scammer.
He probably won't tell Paypal the entire story either, how the amp works, but he doesn't like how it makes his headphones sound, that the seller took it back to make sure it was in working order, and that it was. No, I'm sure he'll leave all that out.
Because otherwise it would sound like this:
I bought this product from someone, and it works, but I don't like it. I sent it back to the seller, who made sure everything was in working order and it was, so he sent it back. I demanded a refund, on the grounds that I didn't like the product and changed my mind, but he actually refused! The product works, but I demand my money back!
Riiiiiiiight. In what fantasy world?