Yep, I bought some merchandise on Ebay that turned out to be counterfeit and Ebay/Paypals dispute solution was for me to pay to ship it back to the seller and then I would get my money back. When I explained that:
1. It is nearly as expensive to ship it back as it cost to buy it.
2. It would be illegal for me to ship counterfeit merchandise back out of the country.
3. I can prove it is counterfeit.
They would not change their minds and refund me under their protection policy so with about 1 exception I have never used paypal or ebay since then. I pretty much won't use either service unless I absolutely have to and would rather pay more than use them.
Basically the only fraud protection policy Paypal/Ebay honors is when it protects them from ever having to pay out.