Question regarding a hypothetical mail order problem for sellers and PayPal...

[Baseball Rarities]

I have been dealing with a unique ebay order that ended up being a scam. Luckily, I never shipped the card, so there is no loss on my end besides a few hours of lost time.

Anyways, while I was investigating my deal, several "what if" scenarios came up. For example, what if someone orders an expensive (say $10,000) item on ebay from me and pays for it via PayPal. Say that PayPal confirms the address and notes that the sale is eligible for Seller Protection. I called a PayPal customer service representative and asked her what I had to do protect myself as the seller. She said that I just needed to send it properly insured to the confirmed address. I then asked her what if the recipient claimed that either the wrong card or nothing was in the box. Her response was basically that the buyer had the right to return whatever he received from me for a full refund and that I would be responsible for that refund. I asked her how I could possibly protect myself from that situation and she said that I had the right to do business with whomever I wanted to and that I needed to decide if I trusted that person. She said that I needed to go with my "gut." Really? Go with my "gut" on a five figure transaction? The representative was very nice on the phone, but she gave me no confidence in doing a large transaction via PayPal with an unknown customer.

This seems like a pretty big loophole for a dishonest person to scam someone. What are your thoughts?