There are some realy horror sotries about what PayPal can and will do to protect their business interests. They are not a bank, they are not governed or regulated by the laws that protect normal financial institution customers. They can and will take, revoke, freeze and reverse money transactions if they deem so necessary. There is nothing you can do other than cancelling your credit card / closing your bank account associated with them.

I have sold to people before who had their identity stolen, the *buyer* got my item. The owner discovered their account was compromised and alerted the PayPal, which promptly reversed the transaction then took and equal sale amount out of my account on top and told me to f*** off. Nothing I could or can do about it.