Paypal can reverse a transaction for many different reasons.
This may initially be a temporary hold until the matter is investigated.
If for example you sell an item, are paid through paypal and send out the goods to the purchaser who has not verified their account, i.e. proved their address usually by credit card details (perhaps as many as 30% of users and most newbies) you will most likely be ineligible for seller protection. This is not totally clear cut. Paypal have unpublished rules on this. They may allow you seller protection on a low value item you have sold, with payment through a purchasers paypal account, but not on a higher value item.
You may sell two items, one which is eligible for protection and another which is not, to the same person within minutes of each other. If these transactions are queried, put on hold and you have already sent out the goods you will be asked for a tracking number from paypal. If the transaction is deemed unauthorised (you will not be told why) the transactions will be reversed and you will lose the money.
The seller protection should now kick in to action and you will get reimbursed for the transaction where the sale was eligible for sellers protection as long, and only if you have been able to provide a tracking number (it is worth noting here that many sellers state in their sales blurb that when the item is sent it is no longer their responsibility, this is complete nonsense, if the item is paid by paypal, they are completely responsible until the item arrives, and is proved by a tracking number to have arrived - no tracking number no proof - and remember, recorded or signed for service does not track therefore if it has not been signed for you are still not covered.) The money for the transaction which was ineligible for seller protection is taken from your account, bank or credit card, and to rub salt into your wound they will charge you a further seven pounds for the privilige of being a victim of a fraud.
If you dredge through Paypal's policies you may understand that this is the case, but their policies are written in jargon which is at best ambiguous. It may take your first or several reversals to understand the precariousness of your situation.
Sending to an unconfirmed address is extremely dodgy and is the seller's gamble - a gamble I for one will no longer take.
Using a credit card or a paypal account to purchase on the net is relatively safe as you can stop the payment on a whim. For the retailer it is a different matter, the system is set up to protect the consumer and not the supplier.
The old adage buyer beware 'caveat emptor' should be changed to seller beware 'caveat vendor'.
PLEASE VOTE BELOW .