what is the proper protocol

Never experienced that on either side of the transaction (knock wood!!). The first criteria would be that I'd want acknowledgement from the shipper that they considered the parcel lost. Then I'd expect that there would be a record of communication between seller and buyer stating that seller was refunding the buyer's money with the understanding that the buyer would not be receiving the parcel.

If the parcel was lost for good, then seller would work to be reimbursed by the shipping company. If the parcel was found, I'd want it returned to the seller if possible. If it arrived at buyer, I'd expect the buyer to either ship it back to seller, possibly at seller's expense, or to re-send the original payment and keep the unit.

I think I'd be satisfied as either the seller or buyer in the above. Obviously, I wouldn't want to have this happen as a buyer or a seller. Good communication and understanding, as always, are key. Everyone needs to remember that used gear, in the long run, saves them a lot of money, so a few extra dollars in shipping costs are a small price to pay.

I think the only thing that would mess with the above is if the amount in question was quite large. Still, I think the above puts more of the responsibility on the seller and, as a seller, its responsibility I accept.

I will definitely wait because there is a good chance even after 60 days that the parcel can be delivered to the buyer.. especially if you use united states postal service. I paid a buyer (international) a good sum of money for a parcel that was supposedly lost, later on delivered to him.. and my claim was denied and I lost the money... buyer disappeared with my eletronic plus money..
just a bad experience for me that i want to share to cover yourself..most especially overseas..if Local or usa, will more likely much easier to pay ..

I agree with Etbaby. The seller is responsible to reimburse the buyer regardless. It's a bummer for the seller, but that's business. And it is fair. 10 day wait is more than fair....warren

I agree with many statements above. I would refund the buyer's money immediately once the shipping company has determined that the parcel is lost, and has committed to pay the claim. I would likewise expect a refund if I was the buyer.

I particularly agree with Orind - The seller owns the package until it's delivered. I've never understood sellers who think once the payment is made, all risk is the buyer's.

Finally, and obviously, once the refund is delivered to the buyer, it should be clear that the package if found is to be delivered to me.

I have to agree with Ditto - the shipping company will typically start a "search" that can take weeks or months to resolve. I had a lost package with Fedex, 2 months later they found it in the search phase (they said that paint had spilled on it and destroyed the outer label). If the package is delivered late the shipping company will deny the claim, and at that point the seller can only hope the buyer will either pay or return the package.

If I trusted the buyer I would go ahead and refund the money now, but I think it is reasonable to ask the buyer to wait until the search is resolved. The seller takes a big risk if the seller refunds the money while the package is still en route to the buyer.