This is a standard scam now. It happens a lot on
Ebay, but it can happen anywhere PayPal is used.
I had over 10,000 feedbacks on
Ebay, was on there for a decade. My membership predated
Ebay's purchase of PayPal, and heard the horror stories early on. I held out, never got a PayPal account, and was grandfathered in -
Ebay wasn't happy about it, but nothing they could do.
I got rid of my account in disgust in 2008 due to
Ebay getting even worse, feedback became asymmetrical, plus of course the endless raises in fees. No matter how they slice it and dice it, they'll get a third. You have to take this into account.
I'm considering setting up a PayPal now, to sell stuff on Etsy. Since my things are going to be $10 or so, I doubt I'll get this scam very much, but sad to say I'll get it a few times - it's happening to everyone now. It's like the Nigerian scams in the early 1990s.
Or the scams from Britain in the mid-1990s.
Or the fake bank account info email scam in the late 1990s.
Or the .... you get the idea.
My PREFERRED method of doing business is cash, face to face. Right now I work awfully hard to make on average $10 a day, if I can do that or better without the hassles of the Internet and all the modern evils, I'll do it. To me it's like this -
Real life: Exchange thing X for cash Y, shake hands, and walk away
Online: Take pictures of Thing X, write a good description, list list list, 3rd time it's listed it sells, 50% chance the buyer follows through ... list again. Nudge 2nd buyer. Finally they pay, answer 2-3 emails while object is on its way, buyer raises a stink saying it arrived broken - remind buyer it was shipped insured and to take it up with UPS (you know it's not broken, you pack things for an Apollo mission). Exchange feedback, each wary of the other like two fencers squaring off. Congratulations! You sold that old lamp for $30, and only spent $27 to do it!