Hi @scmsteve
Would changing the plugin settings to send “refunded” orders over, and in ShipStation setting the Store custom order statuses to add “refunded” the the “Cancelled” status handle this correctly?
When an order is refunded on your WooCommerce store, we would recommend setting it to Cancelled
.
While your workflow should work, there appears to be a bug on ShipStation’s end in how it is handling the Refunded
status from WooCommerce:
https://feedback.shipstation.com/forums/330429-product-feedback-fresh-ideas/suggestions/42118393-woocommerce-refunded-orders-should-not-ship
I was able to verify this from my test where I included the Refunded order status as being exported to ShipStation and enabled the logs on my site:

Link to image: https://d.pr/i/hFn9uB
From the logs I was able to see that the order set to Refunded
was exported to ShipStation, but it did not update the order, despite having added Refunded
in my ShipStation settings as well:

Link to image: https://d.pr/i/2M3PJo
I would suggest reaching out to ShipStation on this specific issue and they will be able to advise you further.
Thanks!