1. Several years ago I made a purchase from eBay for $120. The product never arrived, so I opened a dispute through PayPal. The seller never responded to the dispute, so it defaulted to being resolved in my favor. I got back $95, with a message that
"the balance of the claim is due to you directly from the seller. Please be assured that we will make our best effort to recover the balance from the seller on your behalf."
I only received this amount because
Our investigation will be made on a best-effort basis and PayPal cannot guarantee funds recovery. For transactions that do not qualify for PayPal
Buyer Protection, eBay will provide Standard Purchase Protection for $200.00 USD coverage with a $25.00 USD processing fee.
As eBay owns PayPal, I consider this still getting screwed by PayPal. Since the seller simply was not responding to any inquiries, I never saw that $25. If I had been able to use a credit card, I could have disputed the charge and had no problems.
2. You have to keep a bank account linked with PayPal. There is no way to default paying by credit card, you always have to go through a manual process to select Credit Card (at least they did away with several of the warning messages during this process). This makes it a hassle to pay for things when you don't want a direct withdraw from your bank account (which is 100% of the time). Also, a side effect of being required to keep a link with a bank account: My parents' PayPal account got hacked, and since their checking account was linked with their PayPal account, their checking account got cleared out (which was terrible timing, because they had just transferred over $10,000 to checking to pay for a new roof, so they had a significant amount of money in checking that disappeared, AND their roofing check bounced). PayPal investigated and refunded the money after a week or two, but they were missing actual money (as opposed to a line item on a credit card bill that would have been resolved before actually having to pay it) and had a long period of uncertainty as to whether PayPal would deem them worthy of having their money returned. If PayPal didn't require this bank account link, they have simply called their credit card company and reversed the charge.
3. Try selling something on eBay (owner of PayPal). They strongly encourage the use of PayPal as a payment method, so you get stuck with listing fees, selling fees, AND PayPal fees. My mom tried to sell something on eBay all by herself (which, I admit, things rarely go well when she tries to do something computer related without help). This means I have to try to explain to her why she has to pay 3 separate fees for a single transaction (and I still can't explain to her why she now has a PayPal credit card... I have no idea how she managed that, and neither does she).