It's a month-to-month service, so they're asking for a refund on 12 billing cycles. The TOS is clear that there are no refunds for services rendered. I try to be as accommodating as possible, but this just seems absurd.
Yeah. I would try and compromise with them. Maybe offer some of their money back, but in this case the company doesn't owe them 12 months of refund because they forgot to cancel for a year.