You have to make the consumer whole. Personally I'd try to open the account again. The reg does say you'll credit the consumers account. But you cannot control the use of the funds, whether it is in your bank or another. So if you must extend the investigation and deny the claim, you'll have to ask for the money back, nicely, not so nicely and legally if you must. It is a cost decision.
My opinions are not necessarily my employers.
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell