Return settings questions

Not sure how to adjust my return settings. My only option is “in-policy”. I can’t change to manual.

If I sell an item that’s $5 and the customer changes mind, I’d rather just grant the refund but Amazon automatically makes a label and I’m out $4 shipping.

Also, the customer is given a refund as soon as it’s scanned so if they have damaged the item it’s too late for a restocking fee. Is there a way to change this so I have some control similar to eBay?

Thanks!