Barbara - my reading of the policy (see link below) is that the guest needs to go in and cancel the reservation and that the system will then refund any nights not stayed that are more than 24 hours out from the cancellation.
So probably they'd only get one night refund.
But I would inform them of the link and let them know the policy must be followed as you held those nights for them based on their reservation. I would point out that your policy is already very favorable to guests and you appreciate their understanding.