People result to intimidation like that when they know they are powerless. He really doesn't want to have to sue you because it wouldn't be worth it. When someone is acting childish that really shouldn't invite in-kind behavior. The truth of the matter is that OP didn't really have a bike that was worth $80. If he gives the money back he didn't lose anything and if he does it in a dignified way I'd respect that. I would just say "here's your money" and take the bike and that would be it. Be the better man.