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Whereas what they're legally obliged to do is refund the amount the customer paid.
Didn't the customer pay €500?
It's not down to the shops in other countries to cover fx fluctuations when they're advertising things in their local currency.If they sold it for £450 then fine, refund £450 (and they take the hit or not).
If they sold it for €500 then refund €500.
You are being unfair here. The shop have almost definitely refunded exactly what they received.