I've been bitten in the ass by them before too.
Join the club.
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A few years ago an idiot could not figure out how to download a digital product I was selling on ebay. It was all setup to automatically alert the auction purchaser of how to download the item after winning. I was away on a cruise (which was clearly stated in the auction)and would not be able to respond to questions for at least 3 days. I had a short FAQ and a voice mail number with a message on how to download the product if you if had an issue.
Now mind you, No one had ever had any problem getting the download, but I'm just a "cover all bases" type of guy. After winning the auction The asshole emailed paypal telling them that I had scammed him. 3 hours later he figured out what happened and he called them to tell them it was his fault and he'd gotten the product.
Do you know what the awesome folks at paypal did? They froze the fuckin account for 180 days. Even after close to 20 emails and phone calls (me and the asshole) explaining that it was all a mix up. I did not feel like wasting anymore time fuckin around with them so I let it go. In hindsight, it made me realize you better spread your shit around or risk getting shafted.
These days I only bear with them simply because a lot of my clients want to use them. Any money deposited into my paypal account is instantly deposited into a fresh bank account I created only for paypal use. That money is them immediately as well. I don't trust those fuckers as far as I can throw them.
I also have google checkout as a backup and a real live merchant account as well. I have a backup merchant account on hold too.