Posted By:
SeanI had a similar problem a few months ago (delivery confirmation and fully insured for $955); the post office claimed the package was delivered and both the insurance and DC forms said they were delivered, but the buyer never received the package.
After 2 weeks of contacting the post office and finally contacting the BBB the package magically showed up the next week and they could finally show the signature proof. I knew the buyer (and knew he didn't receive the package, but the PO thought otherwise) and I kept in contact with what was going on.
With any package insured for over $200 the Post Office requires a signature for delivery...I'm not sure if that fills the PayPal requirement.
I would have to say hold on to the money (and take it out of your PayPal account) until the Post Office decides what going on, they will try to find the package first before paying out anything.
Sean bh