I have consistently refused to give PayPal access to my bank accounts and only use a credit card for transactions. The credit cards (in the U.S.) do come with protection. When I needed a verified account, I chose to apply for a PayPal credit card that I never use; I always pay with another credit card.
I filed complaints with the New York Attorneys General office and with the U.S. Department of Justice about PayPal's credit card policies to no avail. Even my credit card companies who were being hurt by the policies wouldn't do anything. My complaint had to do with being verified. PayPal insists that you either give it a bank account or apply for one of its GE Credit credit cards to get verified. I wanted to know why my American Express card wouldn't serve the same purpose. The response was that PayPal would conduct a thorough investigation before issuing the card and know I was creditworthy. How could they know whether Amex did the same. So I applied and in less than 10 seconds was approved. How thorough that investigation must have been.
They gave me the card but I've never used and have no intention of using it. So who lost on that deal?