Should I remove my negative review?

I would update it but not remove it. My husband sells on Etsy. He checks his messages while on vacation (not constantly), and lets people know if he is out of town of if it is going to take longer to fulfill an order for whatever reason.
 
The way I'm reading this, the seller is holding the refund hostage until she promises to revise, or even revises. If that's the case, file a dispute, Quick!

No, if that was the case I'd be livid and I'd leave a nasty review with a copy of what she was threatening me with. I received an email confirming the refund shortly after I told her I did indeed want a refund and before I told her that I would not remove the negative review. It hasn't shown up on my Visa yet, but it hasn't even been 24 hours yet so no biggie.
 
I use ebay. I usually just skip not giving them a review. The way I see it I don't like leaving bad marks for someone, unless it is really bad. So for me when it came to shipping I usually let it go. But that is me.
I do everything possible to work with the seller. I have been an eBay member for almost 20 years and never left a negative review. Sometimes things go wrong and I won't leave a blemish on another's record, unless it's especially egregious. Thankfully, this hasn't been an issue.
 

Before this she only had one negative review and that was regarding the length of shipping time. It was the last person to leave a review on her site right before mine. She seemed to be doing great up until that point. Had she said it was a family emergency or something, I'd be more sympathetic, but an extended vacation doesn't really garner my sympathy. At minimum she should have noted on her site that she would be away and not able to respond.

Should I be nice and remove the negative review?

Because she gets people to remove bad reviews! Don't do it. I would post a follow up as you stated. Did you get the refund yet? If not, I'd add a further follow-up that stated she held up your refund to extort removal of the review.
 
I am a physician, so the situation is different, but I always bring my computer along on vacation to check labs, refills and messages from my staff every day while I am on vacation. I think a person who is selling items that could be gifts should anticipate that a buyer purchasing in October to November is buying a Christmas gift, and so an order arriving after Christmas would be unacceptable. Also, my brother is a tax attorney, and he wouldn't think of taking a vacation between now and mid-April. So, in the same way, if I had a business where I made handicrafts that would be Christmas gifts, I wouldn't take a vacation right before Christmas, because that would be my peak season.
 
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Leave the review; update it with the current info once you're certain of the refund. Future customers ought to know and she needs to treat her business seriously. One bad review won't kill her.
 












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