Paypal insecure?

Indeed, PayPal is for Sellers very dangerous when the buyer wants to betray you.
I had a conversation with a PayPal lawyer who said to go a different route for everything above 2000 $.
When you want to sell via PayPal I recommend to write a contract WITH Passport copy from the buyer. When the buyer does not do it, then you know what is going on. Always send a invoice through the official server and wait for acceptance from buyer. Make pics from item, from box, from address etc. Finally, never send to a different buyer address than the one which is saved at PayPal server ("I am not at home, send it to my divorced wife/ friend/Uncle blah, blah...")

Never had the first problem with them. I have been using Paypal for a long time.
The only problems I have ever had is with purchases on Audiogon where I have sent checks or money orders and the guy disappears. Reason why I refuse to buy via anything but Paypal. Lot of trust in sending someone money and you really have no recourse if he bails. Puts everything on the buyer because the seller gets their money and you don't know what you're getting. This is a rare thing because most people are very trustworthy, however, it has happened 3 times. I will do COD which shares responsibility. Of course the buyer may not accept the package if he changes his mind. No perfect way.

Will become more so, now that eBay and PayPal are splitting. For sellers and buyers, there will be less protection. So, for sellers ask for payment via a bank check sent to you via US postal mail, not shipping until the check full clears, sometimes can take 30 days. Now that eBay and PayPal are divorced, eBay must permit this form of payment. They cannot force you into PayPal. For buyers, things will become more complicated. However, the buyer using a bank check sent via US Postal mail, will be able to use the Postal Fraud statutes and also be able to file a local police report if things get dicey. Believe me, a call to the seller from your local police department will get the seller's attention.

"My guess as to what happened, is that I spoke to the entire country of India, and they just ran out of people to transfer me to."

You couldn't possibly have spoken to the ENTIRE country of India as I know for a fact that many are agents for the IRS.

"Believe me, a call to the seller from your local police department will get the seller's attention." Not so much!

I got ripped off on an ebay/paypal purchase. Bought some tubes which never shipped. Paypal said that seller didn't respond to their inquiry and had immediately withdrawn all funds from their Paypal account(not just from my transaction). So they closed the account and told me I was stuck. Visit to my local police was laughed off; they told me to call the police in the seller's home town. I did and they laughed some more. Buyer beware! Nonetheless, I still use Paypal regularly. I just try to make sure sellers have lots of recent positive feedback or local pickup only.
Cheers,
Spencer