Extortion is the new way of doing business on ebay. I know a number of people who have stopped selling on ebay because of this very reason.
My brother-in-law's brother was making a nice living selling on ebay when he stopped. He told me the extortion had just gotten unbelievable. He would sell items for $100 and then get an email from the person saying they wanted $85 back and were keeping the item, and if they didn't get it they would complain to paypal and leave negative feedback (and this was when you could still leave negative feedback for a buyer).
Paypal doesn't give a shit about the seller, they refund to the buyers for any reason without an investigation at all. That leaves the buyer with the item and a complete refund and the poor seller is out cold. I considered going back to ebay to sell like I used to, but I am glad I did not do it.
I sold on ebay for years, from the very beginning, and it was amazing what some of the buyers would pull, not to mention competitors. One woman I had to report to the authorities because of the harassment I received from her. Threats on my life through email etc. Thats a federal offense, its over the phone lines. All because UPS put one of the boxes on her porch instead of carrying it through the door for her. Finally once I got the authorities involved I never heard from that bitch again.
Another guy had his paypal account frozen when ebay took over paypal. There is $8000 sitting in his account still that he cannot get to. They claimed in the past he had sold antique firearms (when it was allowed on ebay) which they do no longer allow so they froze his account. He has tried everything but no luck.
As far as suing, just go to small claims court, pay the $25 fee to file suit, sue for actual costs and damages up to the limit of the small claims court, they are not going to show up, you will win by default. Collect the judgment and then have a judgment collector find their bank accounts and have the bank take it out, totally legal. The judgment collector will get a percentage, 50% or so and you'll have that money back plus whatever you sued for.
