I think people are confusing a retainer with a deposit.
A deposit is paid to reserve a place at a childminder or nursery setting that is not currently available, but will become available by the time it's needed. It's refundable in the event that the place does not become available or the parent choses not to use it. It usually counts towards the first invoice if the place is taken up.
A retainer is paid if the place is available immediately and the parent wishes to hold it open with a view to taking the place when needed. It's not refundable: the childminder or nursery is agreeing not to give that place to another child and the retainer compensates them for their loss of earnings. Usually the place is available to be used during that time for settling in sessions or for ad hoc childcare but the parent may be asked to pay full fee for the hours used.
It does depend on the contract, but it sounds to me as though this was a retainer and therefore not refundable.
If she's only been childminding a year, then she's still relatively new to the job and finding her feet. I agree she hasn't handled this well, but I'd put that down to inexperience rather than incompetence.
There's also no evidence that she's a rubbish childminder; she's simply admitted defeat over this particular child and it's to her credit that she's been honest about this. Both childminders and nurseries will do this, not because they are scamming parents, but because they recognise that they cannot offer the care a family deserves.
I have a child with me whose nursery admitted his needs would be better met by a childminder and, yes, his mum was devastated because it felt like a rejection.
A settling in period is designed for all parties - parent, childminder and child - to decide whether or not the arrangement is going to work. In fact, the childminder hasn't made the decision: the baby has! For whatever reason, he has decided he doesn't want to be there and has screamed his way through the hours that the childminder has had him. I wonder if people truly know what that feels like? And what it might feel like to a 3 year old child?
This childminder has quickly decided that she can't continue and that's always disappointing when it happens. Hopefully the next setting will be a better fit.