By what to do, that is. Someone marked that for a book that I sent them, and so I returned the point. They didn't ask for it, but I did. Was I supposed to? Reading the PBS guidelines, I'm confused as to what to do if it ever happens again...

It depends on how you assess the wrapping job you did.

If you stand by your wrapping job, then don't refund the credit.

If you didn't wrap the book in a secure way or the requestor made some comment about it which you feel is warranted, you should refund the credit.

Sometimes it's just bad luck, and if the book arrived, then they are the ones to lose a credit due to the bad luck.

Was it a WL book? If it is marked RWAP, then the requestor gets to be placed back at the front of the line for a non-damaged copy.

If your book was marked as "Damaged by USPS"

• This means the book was damaged en route by USPS.
  • USPS has a superb record of delivering packages intact, but accidents do happen. If the package was wrapped properly and this was just bad luck, then you do not need to refund the credit.
  • If the method with which the book was wrapped could have contributed to its damage en route, you should read here for guidance in wrapping a book. The main points are: use plenty of tape (2-inch shipping tape, not Scotch), especially to reinforce corners and seams, and make sure that your shipment is completely enclosed within the packaging (there should be no portion of the book(s) inside exposed).
  • If your book was damaged en route due to poor packaging, you should refund the credit.

It goes both ways.  They can label it as damaged by USPS due to poor wrapping.  Or it could be due to a truck running over it or water damage on both the inside and outside of the wrapper.  You did not need to give the point unless they asked.  But it is very nice of you to do so.  Basically, someone is always out the credit in PO damage unless there was a PBS DC.  Then PBS is out the credit.

Thanks for clearing that up!  I completely stand by my Fort Knox wrapping, and know I understand what to do it it ever happens again. 

I lost the credit the one time I received a book damaged inside and out by the USPS. It came in a bubble wrap envelope that they used to rewrap it. So I have no idea about the wrapping job. I told the member of the damage and they didn't offer to return the credit (nor did I ask). I think that's how it usually plays out. It was very generous of you to return the credit though. :)