Paypal will not cover person to person transactions. They will lock your claim and tell you to deal with the person directly.
Example I had:
Craigslist seller was selling NEW take-off rims and tires. One picture of one wheel. Looked great.
We couldn't figure out a time/day that we could meet up.
A buddy of his had the wheels at his shop. I said I will be around the area and if he wants to leave them outside I will pay via paypal and just pick up the wheels when I drive through.
Paid $1,000 via paypal
I show up at this shop late and the wheels are outside luckily. Tires are 1/2 tread and the wheels are nicked up and a little curbed/scratched. Not even close to "NEW take-offs".
Well, I have to take them with me because there is no one around and the guy has my money in his paypal.
I told him to refund the money and I would take the wheels back to that shop.
Guy won't respond to emails anymore, phone disconnected, and he moved seriously in like 2 days after I got these.
Paypal said to me exactly what they said to you.....
Still have the wheels/tires on my truck: