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So they sold their account to a fraudster who also moved into their old address? Sure, it's possible but now verging on the ridiculous.

They can use common sense for the refund. They are just choosing not to.

the real reason is that adding friction to returns decreases them in general - even legitimate ones.

You don't know they sold their account to a fraudster. You only know that the delivery address changed. That's a very weak signal.