Need Help With Paypal Dispute

Yesterday, I sold a virtual item worth $1300 dollars to a buyer on Ebay with 100% positive feedback from 68 transactions. He messaged me before purchasing the item to negotiate prices and also after purchasing to talk about delivery. He payed me with a confirmed address and a verified Paypal account. I delivered the virtual item to him and I immediately tried to withdraw money from my unverified Paypal account, since I didn't want to deal with chargebacks, disputes, or scams. So first, I payed off all my ebay fees, then I withdrew $500 in the form of a check, and finally, I tried to send the remaining money to another Paypal account when I received an error message. I called Paypal and they told me that they were holding the remaining funds in place because they suspect "suspicious" activity and said that I should be able to send the money again within 24 hours. Today, I woke up and noticed that Paypal had filed a dipute with me claiming that:
"We suspect that this transaction may not have been authorized by the PayPal account holder.
We have placed a temporary hold on the funds until the investigation is complete."
I called Paypal again, and they basically said that the buyer paid from an unusual address that is not usually where they pay from so they are temporarily holding the money. They added that unless I add a tracking number or get the "real" buyer to confirm my delivery, then I won't be eligible for seller protection and if the buyer replies saying that they did not authorize the transaction or if they don't respond within 10 days, then the $1300 will be returned to the buyer. I'm just wondering a few things: What is seller protection and how effective is it? Do you think that the buyer is trying to scam me or did someone really make an unauthorized payment on his account? What is the best option for me in this situation to try to get my money back? Fast replies and any help would be greatly appreciated! Thanks!

You are toast.

+1 ^^ I get about ont of these per month selling proxies. Paypal takes the money back, nothing I can do, other than cancel the account of course. Note that it's not a bad thing, Paypal are protecting the buyer's account. Usually these transactions are from hacked Paypal accounts. Worst I had was 2 months ago with 4 x $86 chargebacks from the one client. You just gotta take the good with the bad, and price your products to include any losses along the way (about 5% of earnings).

yep, toast

I don't think there is any protection when it comes to virtual items. It's about luck there, PayPal spins the wheel to see who's the winner of the dispute.

When selling virtual items, do not use PP. Instead use an escrow service.

Paypal reversed the transaction in favor of the buyer today. I'm so disappointed and saddened by such a huge loss of $1300. The feeling is killing me. I have no idea on what to do to cheer myself up. I've lost interest in doing anything. :02:

Ah, don't worry about it. When you start losing 1300 a day for a week, then you know your onto something!

Build a change into your offering. For example, an actual certificate or something that has to be sent through the post. Thereby you cover your ass with paypal.