I completely acknowledge that PayPal can be an awful awful company to deal with, and I've had my fair share of problems with them, like locked accounts and continually having to supply verification information to lift the sending/receiving limit multiple times. I don't really have much choice other than to use PayPal as it makes things much easier with the international transactions I regularly do.
I must be quite lucky with that aside though, as I recently had to deal with some one who was incredibly upfront about the fact that they were trying to pull a scam, whereby I had a transaction with them of about £140, and after their goods were shipped out, they requested a refund saying that they've come in to financial hardship.
Obviously since it's been shipped out, by DHL express to California, there's nothing I can do to cancel and refund him without him having to return the package to me at his own cost. So because of this he opens a paypal dispute claiming to not have received his order and escalated it straight away saying he wants a full refund straight away. He received his stuff anyway but didn't close the claim and instead sent me an email claiming some of the items were damaged and insisted on replacements being sent out immediately, but told paypal that items were damaged and he wanted a full refund.
Obviously I ask for proof, but I asked in a "softer" way, so I asked for some photographs of the damage as it was standard procedure, which he ignored and just kept demanding replacements which I was willing to sort out for him initially if it was true. The case was still open as well, so I rang PayPal and explained the situation to them, gave them the tracking info and they closed his claim in my favour there and then.
A few days passed and he sent another email, moaning about how he still hasn't received his replacements(?) and that he will be forced to open a new claim with PayPal (as an appeal to the last claim) which he again escalates straight away again claiming he wants a refund because loads of the items are damaged or have leaked and that he's being ignored (still refusing to provide proof or evidence) to me or PayPal.
With him escalating it it goes to PayPal review, and they decide that he can have a refund as long as he sends the stuff back using recorded delivery and gave him a deadline for when he had to submit tracking information which he never did, so PayPal decided in my favour once again and the funds were released back to me.
I'm starting to think that it went in my favour because I've got quite a good standing with transactions, with a minimal amount of problems in the hundreds of transactions I've had with my account, and I read recently that PayPal judge your account on an individual basis too. But both times I thought they'd refund the guy pretty much straight away with no fuss to him, but I had a very positive outcome both times which restored a little faith in PayPal.
/megawaffle crits you for 10,000 damage