Problematic buyer wants to return item after claiming INR, now I'm charged for label?

I do 30-day returns but I always charge the buyer shipping specifically to protect myself from being dinged if someone does a return scam, etc...

This buyer first gave a problematic address. Then claimed "Item not received" (after USPS reported delivered) and immediately demanded a refund. After I updated shipping and had them confirm that their address was accurate in the INR claim, they've suddenly closed the INR case and now say they want to return the item due to "damage and missing pieces" with a picture of what appears to be the still-sealed package I sent.

My issue is, I'm now being prompted to accept the return or offer a refund, but it's saying I need to provide the label? I'm confused because I've not had to do this before for returns and is why I always charge shipping. Do I just have to eat that label cost regardless - and then see if the original item isn't scammed?