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You would lose any dispute if tracking does not show as delivered and would have to refund the buyer.
If you sent it trackable and its showing as not delivered then you need to claim from the postage services you used to get a refund for yourself after refunding the buyer.
If you chose to send untracked then sadly you lose out as the buyer has paid for an item and not received it.
Surely you would want a refund from a seller if you didn't receive your goods?
Sorry but thats wrong, the only thing paypal accepts is TRACKABLE proof of delivery.