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When I finally managed to report the problem, PayPal investigated - which meant they contacted the seller. As soon as they did that the seller refunded my money, and my bank refunded the charges I incurred so I wasn't out of pocket in the end, it was just a bit scary.
When paypal know there's a problem they do investigate, and ask the seller to explain the transaction, because the fraud could be associated with the vendor or they could be a second victim of the crime. The transaction was $800, which is significantly more than any other paypal transaction I've ever made and I've only ever paid in dollars to US stores, so it was fairly obvious. Part of the problem was because paypal noticed it was strange and limited my access to the account until they could find out what was going on.
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