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RichardGot it Jay. When the package was totally destroyed by the post office, I am assuming that he did not take possession of the package? It was probably kept by the PO for a claim? If that is the case, then Paypal's stance would be that the package was not delivered. I think that even if they would have contacted you for an explanation, it would not have mattered. Even if the post office loses the package, the seller is responsible in Paypal's eyes.
This is why Paypal sucks.
Consider this: I bought a 3k card a while back. I paid through paypal using my credit card. The seller fedexed the package overnight. When I opened the box, it was empty. I filed a claim with Paypal, spoke with several of their customer service people, their managers and their managers' managers. Their stance, every time, was that the tracking number that the seller provided shows that the package was delivered so their hands are tied.
Paypal ignored the seller's lack of feedback, recent negatives (which were added in a few short days), current open complaints about him through ebay and paypal, my 1500+ positive feedback, and refused to pursue getting my money back. Paypal did nothing for me. My credit card company did.
Paypal is wonderful.