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Tell paypal what the seller has said.
Normally if you have sent an item back trackable and the seller refuses to sign for it or does not collect it then they would normally still give you your refund as you have done everything asked of you.
But keep them informed so they don't close the dispute before you get refunded.
Click on the words "Contact" at the bottom of your paypal account summary > click on the "call us" option on the left (fees "may" apply so check the cost with your phone tariff first, as you sometimes have to wait a while to connect).
When you get through don't select any options just hang on till you get transfered to an agent or say the word "agent".
OR have you considered contacting Customer Service via Facebook or Twitter?
It's: https://www.facebook.com/PayPalUK and @AskPayPal for Twitter.
Advice is voluntary.
Kudos / Solution appreciated.

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