Digital items/services have limited protection through PayPal. Conducting such transactions is a risk that you're putting yourself in. That isn't just PayPal's rule but it also comes from credit card companies. You can get scammed with other processors just as easily.
A real business dealing with PayPal knows that you send documentation through the mail to their confirmed address, it protects you in the long run.
People's ignorance leads them to think only that, "PayPal sucks". If only they would take the time to learn a few things.
Up until recently I have not had a problem with Paypal. However, someone bought quite a few ebooks from me and I received an email from Paypal saying I may be the recipient of unauthorised funds and they were putting the funds on temporary hold while they investigated. I checked the website of the buyer and their email address was the same as the items were delivered to. Having checked with similar sites to mine, they said this person had scammed them too, but Paypal always takes the side of the buyer and returns the money to them. Sure enough, a few days later I had an email from Paypal saying they had returned the funds to this buyer. I didn't actually lose anything as the goods were digital but anyone selling tangible items and there have been quite a few scammed in this way by all accounts, would lose a lot. So beware!
I have been a PayPal member since 2004 and I have never had a problem with PayPal taking any of my money. You might want to chase down your credit card company...