Sounds like at most all you should do is stop promoting them and appologize to the customer as sincerely as possible. If it seems like a smart choice, maybe send them the money out of your own pocket (the customer will probably pay you triple in good publicity). More than likely it is just a misunderstanding though. Many people out their aren't very smart, nor computer literate.
For a sponsor they are crazy if they do not apologize and refund the money in all but the most extreme cases. If the customer charges back they can get fucked. Not to mention the effect of just one pissed off customer going to ripoffreport or other such sites. Then it may snowball from there and before you know it you have two people a week writing negative replies to the original complaint and it is turning up #2 for your site name in Google with the title "SITENAME is a SCAM!!".
