Micro, I hold the dealer blameless if they are following ATF's direction.
I went on a rant for a couple paragraphs, but cooled off, and thought better of posting it.
Somehow, I think that even if the sale is "made" before the background check, denial should result in a refund. Shouldn't it?
Reporting the denial to local LEO (or federal) doesn't seem a terrible thing to me. Might just nail a bad guy. At least, there would have to be an investigation. And that might just clear a guy who got denied due to a clerical error, as much as bust a guy trying to buy illegally. Or so I would think.