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Paypal is doing exactly what they say they will do in their buyer protection policy.
Paypal state this >>
IMPORTANT: You may be required to return the item to the seller or other party we specify as part of the settlement of your claim. PayPal Buyer Protection does not entitle you to reimbursement for the return shipping costs that you may incur.
Although they will compensate you for some of the cost if you have activated this at some point before you made that transaction.
You also have the option to do a chargeback via your card issuer instead of a Paypal dispute if you funded your Paypal payment via a credit card.