what is the proper protocol

When I shipped a parcel and it was lost, I payed immediately, without being asked to do so by the buyer, and was reimbursed by the carrier at a later date. Two parcels have been lost coming to me. In the first case, the seller sent funds immediately, without my asking. In the second the seller sent the refund after being paid by the carrier; I considered it shabby form and informed him so.

I would return the buyer's funds. The seller is responsible for the item until it is delivered to the buyer. --This is how I do business. I have taken to asking sellers (when I am buying) what their policy is should an item be damaged or lost in shipping, so that there can be no misunderstandings.

I was party to a shipping claim in which a manufacturer was the shipper. I received my portion of the claim once the manufacturer had been paid by the shipper. So, that's the protocol I follow.

With out a doubt, I would wait to be reimbursed from the shipping company. This is only fair. Otherwise the package could be found and delivered.

The rembursement process by the shipper can be as long as 3 months. The buyer should not have to wait this long to get a refund. I would recommend that you refund the buyers money within 10 days. Hopefully the shipping company has already admited that they have lost the package.