You are probably almost better off just taking a postal money order. They can counterfeit those but you can verify them easily.
This is a bad deal for you.
I have no idea why the dude thinks he gets his shipping back. I buy lots of stuff from FABO members and NEVER had an issue with ANY of them (if I knew how to leave positive feed back I would because every transaction has been perfect) and it makes me sick to see this happen.
I damn sure won't do business with this guy for sure.