Is it ethical..?

My first thought was to send it back as it is and make them pay the postage. Then I thought that they might think I want to return it and give me a refund. So I initially didn't want to fool them...

That wouldn't be fooling them, that would be letting them fuck up all by themselves. As a sidenote, if they did give you a refund (direct to a bank account) then keeping the overpayment it is legally a lot easier. Due to an absence of physical presence you could easily deny knowledge of having received the money (still have to pay it back if they ask). Provided you don't present the return as a request for a refund, you're pretty much in the clear.