My ex girlfriend got ripped off for $400 for a really nice camera on ebay, and paid through paypal.
Paypal's response was "Well he doesn't have any money in his paypal account right now, sorry". It was a horrible experience at the time, and i avoid paypal, if not for its horrible customer service, then for its anti-gun stance.
I've been thinking about giving them a second chance, because hey, $400 is a better "gotcha!" than i ever got to give my ex-girlfriend as a parting shot.
No really though, check out www.paypalsucks.com