Yes, PayPal can be a very risky place especially if you are new to it. It is a minefield in all honesty but we can all trade safely if you take your time.
I dont work for PayPal in any way and am a regular PowerSeller on eBay and use PayPal all the time. But, you need to understand that you agreed to the PayPal Terms of Service (TOS) when you signed up for the service. This guide is simply my understanding of PayPal and may or may not be 100% correct.
I have like you been totally ripped off over the years of selling on eBay and not just by £100.00 as you have done. I'm talking £1000.00 plus. Everyone who uses PayPal as a payment processor needs to read the TOS and conditions on Seller Protection Policy. Did you know for example that by adding a surcharge to your listing in order to offset the PayPal fee's will VOID any seller protection you might have had? Ebay used to email sellers and threaten to remove listings which had surcharges indicated in their listings unless they were removed.
Visit this direct link to PayPal: PayPal SPP T&C's
You should always send items using recorded delivery so that you do have some kind of tracking number. PayPal DOES pay up when you meet the criteria of the SPP terms. It might take around 30 days to resolve but providing you do have the information they require you should be fine.
On the subject of "Confirmed Address" PayPal accounts it seems there is a flaw in the system. I have spoken on the phone many times to PayPal as to why my account goes from "Confirmed Address" to "Unconfirmed Address" when I have not changed a single thing to my account. The system just does it that way.
It seems that in order to get a "Confirmed Address" status you must be verified and also register your credit / debit card with PayPal. When this is done PayPal uses an automated system whereby the card owners address is checked against the PayPal address held on file. If the two are identical then PayPal can safely assume that the card owner and registered PayPal account holder are of the same person and legitimate. The problem here is that because the check is automated not all card companies offer the check with PayPal (so I have been told by PayPal). This means that you might be genuine and register a card with PayPal and still not achieve a "Confirmed Account" status. Well, thats just great isnt it?!
My experience: I had been using the same card since 2001 and when I moved house last year I had to update all my details with Ebay and PayPal. You also have to update the details with your card issuer of course. I used my PayPal account and found I was still "Confirmed" but a week or so later my PayPal purchases were showing as "Non Confirmed". Why is that? My card address etc etc all matches up fine. A phone call to PayPal didnt really help as the rep told me to check my Ebay and PayPal details were all "linked" (a note later about "linking"). Everything was fine and although I deleted details and re-enetered them AND added another credit / debit card to my account I was still showing as "Non Confirmed". A few weeks later my account mysteriously became "Confirmed" followed shortly afterwards by another "Non Confirmed" status. In the end I gave up and it simply sorted itself out and has been fine every since. One of the problems is that because of the increase in card fraud many eBay sellers are only accepting PayPal payments which are from "Confirmed Address" accounts which means that if yours is not then they won't sell to you. Terrific!
LINKING: You can check your accounts are "Linked" by logging into your eBay account. Then clicking on "addresses" under the My Account menu list. Next click on "View all postal addresses". The next page shows details of your account linking. Adjust as necessary.
CONFIRMED: You can check to see if your account is of "Confirmed Address" status by logging in to your PayPal account. Once logged in click on the "Profile" tab and then "Postal Address". You should see your address and underneath something like credit card in brackets (if you have attempted to confirm your address). To the right of the page you will see the "Status". It should show "Confirmed" in this box if you have a "Confirmed Address status. Remember that some PayPal users do not show as "Confirmed Address" accounts because they may have their registered address on PayPal set as their workplace address with the card being their personal one, ie, they will never match up!
UNCONFIRMED: This isnt all bad. Just because a buyer has paid you and is "Unconfirmed" doesnt mean he is going to be fraudulent. As stated not all PayPal accounts can become "Confirmed Address" accounts. If the buyer doesnt own a credit card for example. You need to look into the buyes feedback and maybe see if he's been building up his fedback with 1p purchases etc.
INTERNATIONAL and PAYPAL: Seeing as Ebay is truley international and you might decide to accept international bidders to your auctions this can bring problems. It is very unlikely that international bidders will have "Confirmed Address" accounts (US excepted) due to the PayPal system of confirmation. I always accept payments from these bidders if they meet my criteria which is simply that they have and will pay with a "Confirmed Address" PayPal account. I also check their feedback to see if its positive and been used regularly too. You will notice that just about EVERY international bidder will tell you their PayPal account is Confirmed. Then when you agree to let them buy from you and they pay using PayPal you find they arent Confirmed at all. So, what do you do? PayPal will tell you that if you arent happy to trade then you refund the buyers money but you can wait a while before sending (see below).
Refunding payments can lead to more problems. 1) The buyer potentially can leave you bad feedback for not going through with the transaction even though you stated you require a Confirmed Address status. 2) The listing is now over so you have to sort out the fee's involved (which you can only do after 10 days have passed) afterwhich you only get the eBay fee's refunded IF the buyer agrees the transaction was cancelled. He can, if he wants to be awkward, say NO, and that way you might not get your Ebay fee's refunded at your loss!
If I receive a payment from a PayPal user who has an "Unconfirmed Address" then I usually let them know I will hold the payment for around 7 days. This length of time is purely my own personal choice and it allows me to "suss out the buyer". If they bitch and moan about it then your best bet is to refund the payment as most genuine eBayers would simple say "no problem" to your request. 7 days is the longest you can reasonably hold the PayPal payment for (according to my chats to PayPal) before you must send the item. Any longer than this and a complaint can be made against your account. Did you know that PayPal can reverse a fraudulent transaction 30 days after you have received the funds. By then you would have sent the item and thought all was well. You have agreed to let PayPal do this when you signed up for PayPal so READ your TOS.
If you think you can get ahead of fraudulent transactions by withdrawing your PayPal funds to your bank account straight away then think again. You might get the funds to your account (normally 7 or so days to a UK bank) but should the transaction turn out to be fraudulent then PayPal will simply put your account in the red. As soon as you use PayPal and receive funds you will not see the money at all as PayPal will have removed the required funds for the reversal.
The best advice I can give is as follows. Check the feedback of the buyer and see if he has regular use of his account. Check the times feedback was left to see if it is genuine or bogus. Check that the registered Ebay account and PayPal account match up. If the PayPal account shows as an "Unconfirmed Address" then be cautious. If the PayPal account shows as "Confirmed Address" then send the item recorded etc etc so as to meet the criteria. Simply adjust your P&P charges to cover this extra cost, it makes sense in the long run.
PayPal's response to receiving funds from an "Unconfirmed Address" account will simply be to tell you to refund any funds if you arent happy or are unsure of the buyer etc. Trouble is there are fee's etc to be paid now and of course hassle for the sale etc so why not add a line to your listing requesting PayPal payments must be from "Confirmed Address" accounts only and also indicate that you will charge a small fee (to cover the hassle and fees) if the buyers PayPal account shows as an "Unconfirmed Address" after payment has been made. You havent got to NOT accept funds from "Unconfirmed Address" PayPal accounts if the buyer appears to be genuine etc and has paid you thinking he was "Confirmed" but use your judgement in this case.
PayPal is a great albeit expensive way to trade on Ebay but you need to be careful as you go. If you had a merchant account you would still have to pay fee's so PayPal are entitled to take a small share of your profits in my opinion. Take time to read some of the T&C's especially those regarding your Seller Protection. There are many sites relating to PayPal and the way it works. Run a search on Yahoo for something like "PayPal problems" and visit a site or two, then make up your own mind on PayPal. The majority are not always good and you can find out some real facts about the way it works by doing a search. Such as, Why does PayPal charge you for moving money from one registered email account to another of your own registered email accounts when its only a simple internal transfer? Does your bank charge you for an internal transfer, hmmm, dont think so? PayPal / Ebay is out to make money and make money it certainly does at every opportunity.
Be careful and dont be another sad statistic.