I have been trading on Ebay for several years now and recently lost  $200.00 to a fraudulent seller.  I should have read the fine print on Paypal before I stupidly sent a zero feedback seller $375.00 through Paypal for a clarinet.  I figured out quickly that something was wrong when the seller stopped returning my emails as soon as she received my money.  I went to the resolution process at Paypal and then escalated it to a claim when I was sure that the young lady was not going to respond to my pleas to give me either the clarinet or my money back.  I did eventually recover $175.00 but it came through Ebay, not Paypal.  If you don't recover all of your money from a fraudulent seller through Paypal,  then the most you can recover is $175.00 that comes straight from Ebay.  Their guarantee is $200.00 less a $25.00 fee. 

Why did I make such a stupid mistake?  I thought that Paypal guarantees every purchase made through them for up to $1000.00 and that is not how Paypal works.  Paypal does guarantee your purchase only if the seller has established a very good reputation with them.  If the seller has excellent feedback established over a period of time, then Paypal is quite sure that the seller is a trustworthy person or business and in the seller's ad, it will tell you that this seller qualifies for the $1000.00 warranty.  If you don't see this $1000.00 warranty in the ad, then your purchase is not covered by the warranty. Think about it.  If a person has a feedback score of 200 with a 99.5% positive rating, then Paypal knows that this person is going to be honest and Paypal will stand behind this seller.  In all likihood, Paypal probably doesn't have to fork out very much money at all, to anyone.  Ebay is the one that has to fork over the $175.00 if a person gets "took" and this probably happens quite a bit. 

I sure wished that I had read the "fine print" before I so quickly and stupidly gave away $375.00 through Paypal to a zero feedback seller.  I learned the hard way.  Now I don't bid on anything over $200.00 if it's from a low or zero feedback bidder.