Should I have honor this refund?

I own a specialty children store in Vancouver, WA. I sell clothing for special occasions and such. A regular customer who buys lots of clothing from me for her girls came in the other afternoon. She had bought a package Dixie belle panties. They are nylon and very pretty. The Mother asked for an exchange due to damage which was fine. The reason she wanted the refund was freaken bizarre! The elastic bvand on panty separated from a !! Should I have honored this exchange??