I got breaked by PayPal last year.
Was selling a bit of kit called a Cat 5 Tester, worth about 3k new sold it on ebay for 900, Guy in Italy won it and payed by PayPal plus the Parcel Force cost. I'd got my money so shipped the item. about a week later the guy started a dispute with Ebay and PayPal saying he had paid for the item and he had not recieved it!, I checked with Parcel Force and Tracked the delivery on the web, it was being held at the local Post Office in Italy (in the Guys home town) and they were unable to deliver it?
I informed Ebay and PayPal together with all the Parcel Force Info, a few more days past and the Guy still saying no delivery, again I checked the Tracking of the item and was informed they could not deliver but had left cards at the address asking him to pick up at his local Post Office, a few more days and ... yes you guess it PayPal had refunded the guy's money from my PayPal account (which was now overdrawn because I'd already transfered most of the funds to my Bank), on the same day as getting his refund he decided to go and pick up the item from he's Post Office!!!
Im now minus the item and stuck with a near £900 overdrawn PayPal account which PayPal were demanding I correct imediatley, I even tried to claim sum funds back from Parcel Force who were basicly saying No Way as the item had been signed for and pick up?!
Tried to reason with PayPal but really just wasting my time, even recieved a strike from Ebay over this.
Haven't used PayPal since, and yes they do come after you for outstanding fund by the form of a Credit Recovery Firm, so I ended up having to Pay them.
Ohh ... and I would have HIT HIM but the fact he was in Italy.
Chris.