I'm having ths exact problem. Paypal requires me to return a defective item to the seller before I can receive a refund. Seller isn't responding to any email in the dispute resolution centre but I have screen shots of ebay messages from the seller stating that I DO NOT have to return the item... I have no way to upload the messages to support my claim! Not to mention returning the broken item (car radiator) will cost more than the actual amount being refunded!
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