@Michael8624,
I would refund the guest completely or at least keep the first day and refund the rest. It may not be worth haggling over it even if you are in the right. I mean there is the saying do you want to be right or do you want to be happy?
The worst thing that could happen is they lie, and/or report a safety issue then your listing gets suspended while they investigate (which could take weeks) with no updates on status (and communication only via email with the safety team). Even if you do “win” and get the funds (because you had a non refundable policy), and get your listing reinstated because it was false accusations, you will lose time (and potential income) for the safety team to investigate.
It really isn’t worth the headache. Don’t waste your time with this issue, move on, and hope someone honest, kind and easier books your space.
Let us know how it goes either way…