Scary and depressing story! That is a nice loophole in their policy. After searching the net, I found a few more paypal horror stories that were eerily similar. Seems like this scam is slowly spreading. Paypal is obviously aware of it, but since they cannot control the credit card companies......well, as Dan mentioned the money has to come from somewhere.
http://ask.metafilter.com/77638/Can-...t-can-go-wrong
I think this "loophole" finally puts the nail in the eBay coffin for me. Way too risky to fall prey to this scam on big ticket items. I will still sell on eBay, but nothing over ~$150 (with fingers crossed). Matt was real lucky, "bidsformore" obviously did not have the funds to pay for his CJ (or else we would probably be hearing the same story from him). Until paypal corrects this, it will only drive more sellers toward auction houses.
So get off that recliner and start working-out......those auction catalogs are going to get even heavier. Now, what was the name of that auction link by that Lucky fellow???
Lovely Day...