Well, that can happen. It can certainly happen if the evidence doesn't exist, and thus they feel they cannot prove the sexual aassault in question, and it can -- sadly -- happen, even when that person was indeed the perpetrator of a sexual assault.
As far as what else that can be done legally in this case, that's something for your cousin and her parents to talk about with their lawyer. Depending on the circumstances and what the entirety of the situation is, yes, sometimes additional steps can be taken (civil suits, pressing different charges, etc.).
As far as what is going to happen now, your cousin and her family simply need to talk about her safety and how they want to manage this. I'd also suggest she follow up with counseling for herself, and keep a watchful eye out. If he bothers her or harasses her in any way, action can be taken.
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