I don't like paypal's policy of forcing the seller to give back the money for items that don't arrive. Especially when the buyer has chosen not to pay for postal insurance. In this case it is their fault for not insuring the item.

This happened to my girlfriend a while back. She sold a Nokia phone on ebay for £50 and the buyer was very rude and pushy demanding the phone be posted to him within minutes of the auction ending. So she rushed to the post office on Saturday just before it closed and posted the item, without insurance. But the buyer then claimed the item never arrived and paypal forced her to give the £50 back to him. We are sure he got the item, as from his emails he was very rude and didn't sound trustworthy at all. For this reason I demand recorded delivery on all items I now sell on ebay to ensure they are tracked and I can prove they were posted.