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Same thing happened to me last year with a 1999 Honda Civic SiR with 41k miles. Sold it on ebay and was crystal clear that it was wire transfer or cash in person only. The buyer refused to use anything but paypal for the entire purchase.
After talking to ebay and paypal they confirmed that paypal offers no protection for the seller.
Buyer left negative feedback but luckily I had him ask ebay to revise it while we continued to talk about other forms of payment. The deal died because he refused to pay any other way.
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