You admitted before that it is definitely possible that the issues are caused due to his location, which looks like it's the case here. If I buy a phone from another country and when it arrives it turns out that it doesn't support the service in my country. So I can't call or text with it. If they didn't mention it beforehand then I have every right to require my money back. If you would have mentioned before he bought the VPS that it was not going to usable for him, do you still think he still would have bought it? And no, there is no particular "rule" for this, but that is why we are here, to prevent people like you from misleading their customers and afterwards trying to get away with it. You are to refund him and that is not up for discussion at this point. So once again, if the PayPal dispute is not decided in his favour you will have to refund him or you will be banned. Please keep us updated here.