I was sent a package that was "confirmed" that it was delivered. It had been over a week of the confirmed delivery and I still never recieved it. I accused the sender of not sending the item. He said he did and that delivery was confirmed. We both contacted the Post office. The post office told us they would look for it. finally we all decided it was lost. The sender was about to refund my money when
a neighbor down the street came over and handed me the package!! She said she had it for over a week and finally decided to bring it over! I was furious at her, that B*#$%H }( (although I didn't show it. I don't know her LOL!). I contacted the sender and told him my neighbor brought it over. I apologized and totally felt like a total idiot accusing him of not really sending it. He was very nice through the whole scenario.
So, at least with the United states post office a confirmation just means it's delivered, but not necessarily to you, and there really isn't anything they can do if it's lost. I always ask the sender to send requiring a "signature" for delivery. This has cured all lost deliveries for me.
I would refund to avoid bad feedback. Especially if it was a cheap item. Bottom line, next time, ask for a signature delivery when sending or recieving. It's such a simple way to protect yourself.