THEN sue them.

And last I would look this person up every day just waiting for them to list something for sale. Once they did I would buy it, dispute the item, and ship them back their brick.

The buyer did this so they’d have a tracking number to feed paypal to say they sent it. You may have to take the seller to small claims court since they’re committing fraud. But it’s important that PayPal knows.

PS. eBay and Paypal staff can read the dispute as long as it’s open. Once it’s closed it can’t be reopened, and becomes an extreme hassle. You can fax eBay/Paypal a scanned copy of what you received. Make sure to mark the fax with all the contact data you had with the buyer, because the agent who receives the fax certainly will not be the same people who work the case. It’s also technically possible to email small jpegs (80KB) to eBay/Paypal, though there is no guarantee that the email system will let the agent open it. If you want to send PayPal/eBay an email, find the email notification in your email and hit reply there instead in the eBay interface.

re: other comments and feedback
Negative feedback was being used as an extortion mechanism and distorting the marketplace. Trust me when I say eBay is better off without it. You’d see people selling hundreds of virtual items (eBooks, free software, etc) just to inflate their positive feedback to sink any negative comments.

Bad Advice:
Removing money from your account/closing it. This will just flag your account as the fraudulent account, and good luck ever being able to use PayPal ever again. If you’re doing business with PayPal you should never have your personal account attached to it.

Many US banks have no-fee checking accounts, and you should use one of these accounts only for PayPal. If your account is ever compromised, the most you lose is the amount in this account.

You don’t truly own your business if you subject yourself to eBay’s policies. You’re really more like a franchisee who has to play by the franchiser’s rules.