This pertains to hosting. I offer a discounted domain name with my packages. Therefore, if anyone cancels within the first 14 days, it is clearly mentionned in the TOS that I substract 9.95$ for the domain name registration (and then release the domain to them, it's useless to me). You can probably increase that to up to 12.95$ but I stick to the 9.95$ price point.
Basically, have a TOS that clearly states what you would consider a valid refund request. Also keep a detailed account of all your dealings with that person. Protect yourself because people will try to scr... you.