If you are unable to provide a service people paid for, then you give them their money back. It's pretty simple. You can give people an option to leave as cred

If you are unable to provide a service people paid for, then you give them their money back. It's pretty simple. You can give people an option to leave as credit (e.g., we'll give you $400 of credit instead of a $300 refund) but it should be just that - an option.