Application fee refund?

[Meghan McGuire]

So I am renting an apartment and I showed it to several people who were interested and 2 of them filled out the application the fee is $40 non-refundable I use a local community program that runs the applications and the fee goes to them for the background and credit checks so both of the applicants were approved but one had a higher income and credit score so I chose to rent to that one now the other applicant is up in arms and demanding a refund but I don't believe it's my obligation to give a refund but I'm just wondering what other people would do. I'm just looking for a a little feedback.