I am just amazed. The same thing just happened to me. Paypal better get this kind of thing resolved or there won't be a paypal. In my case the transaction was for services, so I can't even get seller protection. My company generally works with about 100 clients per year, many of whom are online and need paypal to pay for services. I have always recommended them. Now I will need to tell my clients that they need full credit card services to protect themselves. Paypal in this instance won't even do anything about the reversal. They won't call the bank or give me the name of the bank without a subpoena. Maybe there's a way to do a class action lawsuit on this against all banks and paypal. I have an attorney friend who is a little short on work. Maybe they'd like to take this one on.
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