Yes, this is complete, utter nonsense. Standard industry practice is complete B.S. I've operated a small business for nearly 17 years, and have accepted PayPal the entire time. I will now inform ALL 10,000 of my customer base (mostly recurring customers) that I will either need to A) Stop accepting PayPal (most have credit cards anyway) or B) They will NOT be refunded the PayPal fee if they make a make mistake or the order needs to be returned. This will result in less business for PayPal if A) I don't even offer as an option any more B) Customers laugh at the notion of any product return getting whacked between 2.9% to 4.5% by PayPal. Yes, about 4.5% is what the fee is for my International customers, which is about 40% of my overall business. PayPal might think small businesses like mine should be able to absorb and and not pass along the butt reaming to their customers? NO way. Bad for business, and certainly not tenable for a small business that is already forced to compete with the likes of Amazon free returns and free shipping. An NO, PayPal... this ISN'T industry norm. I also accept Visa, MC, Discover, and Amex as Payment options, and none of them charge these fees beyond the per transaction fee that is a whopping .05. Whoever the genius is at PayPal that decided to institute this policy needs to have their head checked.
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