Paypal is not 100% with the report functionality. Paypal will not refund the cash if the bank account it's tied to is clear of funds. It happened to me, paid a guy for a game, he cleared out the account and skipped. My only recourse (per paypal) was to contact the police in HIS town, which was 12hrs away. Luckily it was for a $40 Xbox game so I cut my losses and learned my lesson.

Cash in hand, easiest, trusted, etc. But it involves traveling to see the machine. So you travel out there, inspect the machine, then watch him pack/ship it with NAVL if necessary, Pay him in cash, Then fly home and have a new machine! Costs you Shipping + Plane ticket, but you should have FAR less surprises than buying based on photos.

Since it was $40, I used paypal funds.. but I'd agree on the extra protection of CC for large purchase through Paypal. Can never be too safe, imo.

Yep. It's their form of "spam/fraud protection" They assume that if you have a real linked bank account you are less likely to commit fraud. Unfortunately, that doesn't stop it from happening. They can and will tie up your funds, or withdraw from linked accounts or backup CC on file, if necessary to complete a dispute.

On the other side of the coin.. Paypal does offer a paper trail and a receipt of sorts, so it should be disputable in a court of law with some high chance of successfully winning the battle. However, travel charges (you have to go TO the county/country the crime occurred in.. ie where the toolbag lives), legal costs for lawyer.. filing papers.. etc, on top of the stress. You have to weigh all the "costs" associated with the potential losses and determine if its worth it to you to dispute.... However, once you are in the aforementioned Toolbag's neighborhood, you could make a visit to him and "settle it out of court" too...