"The customer is always right."
This isn't always true. It shouldn't even be a binary right vs. wrong analysis, however.
Instead, let's decide to cater our products and services to those that we want to work with.
It's much more simple than you think. If a client asks me for a refund, I immediately give it to them no matter what. Now it becomes my battle to win and situation to assess.
Path #1 is the realization that the customer was absolutely right. Something was wrong. In these cases, I try to win them back by admitting failure and using good 'ol personality to get them engaged again.
Path #2 is the realization that the customer is simply being a pain just to be a pain. It's these types of customers that I recognize quickly as less than desirable to work with. I issue the refund and let us go our separate ways. At that point, I don't want to work with them anyway.
Either way, the end result is a success. Path #1 yields me the chance to regain a customer that would become long-term if I end up gaining back their loyalty. Path #2 yields me more time to focus on the customers I would like to work with.