I have posted before about this situation but after that post i did win my case against them and got my money back. Here are some tips that might help you do better at holding on to your hard earned dollars.
Disclaimer: Some of this is NOT fact and i have nothing in writing to support some of my thoughts here. However, as of now i have a spotless record and i have won 100% of my paypal cases so far and i have been with paypal for approx 10 years now. And that says something about my ability to give advice on this. But like i said some of this is gut feeling and some of this is fact.
I hear all these stories about paypal this and paypal that, but paypal has been very good to me and has had my back on any case against me for many years now. I am very happy with thier service.
The first rule is - document document document. This is the reason that it is important to do your support on the oxwall site and not some other environment. It may not seem like much but it helps support your cause when paypal can see the support request and read it on the same site as the customer puchased it. Having customers go to some other environment for support can hurt your cause.
Make sure in your initial support conversations that you ask alot of questions, that way you can share that data with paypal if something should go south.
You have to do the paypal claim forms correctly, you have to share documents, you have to tell them that this is a non tangible product and that the customer already has the product and there is no way to retrieve or get back the product from the customer.
You also have to stick to the facts, you cant lose your cool and tell paypal about how the customer yelled at you and how they made you mad, paypal does not care about that. They only care about the facts of the case.
Act like a business, i see so many people on the paypal forums complaining about losing paypal cases and these merchants do not even present themselves as educated business people. If you cant explain what happened using logic and professional terms and without personally attacking the customer you will never win a case. Its the same as if you were going to court, you have to take the facts with you, present the facts and convince the judge, that is how it is done.
I had someone one time try just what you talk about here, they bought it and then they claimed we never got authorization for it. But yet i had documents that showed that the customer was working with me on a support issue that same day and so of course he authorized it. I won that case.
Another customer used their debit card and then said someone stole the card, paypal took the money back but i convinced them to go after the bank and make the bank prove to us that the card was stolen. It took about 3 months, but with my documents and my facts and talking to them as a business person and not a pissed off merchant, i got my money back on that one too. The bank finally made the customer pay the sale on the card.
Also it is my belief that the longer you are in business the better that paypal can assist you. Remember that if your just starting out in business and you dont have that many sales how is paypal going to know what your doing. However, if you are like me and you have sold a ton of products over the years and never have any complaints paypal can see that over time and they will most likely take your side.
You need to know that the last time i looked paypal does NOT offer customer protection for non tangible products (like software) so the customer has no leg to stand on really unless they can prove you have been negligent.
Also it is very very important that you get a paypal business account. Using a personal account for business does not help your cause but having a business account will give you some protection at paypal.
One of my customers could not get FFMPEG to install, no matter what they tried they could not get it done, there was something with his server or his plan that did not allow it. Anyway round and round and the customer finally called me every name in the book even though it was not my fault, they cussed me out they called me horrible names, they insulted my profession, then they tried to get their money back via paypal. And all the time i treated the customer like a professional would. After 20 days i won that case and the customer swore they would never use my product. I left the key in tact anyway. A year goes by and one day the customer writes me back and thanks me for my wonderful product and that they finally found the issue with the server, he thanked me for my great patience and understanding. And he apologized for everything he ever said bad about me. We now have a great dev to client relationship.
Dont give up, keep at it, keep being professional and keep putting your best foot forward. Yes there will be those who try to scam you, its just the way the world is today. However, if you follow what i said here you will have a leg up and be able to win some of those cases.
I hope this helps...
Dave