"You didn't get your stuff and paypal is responsible. No agreement between you and a merchant (paypal) can waive your rights to charge back a transaction through your credit card company."
The problem with this is that you did get what you paid for. You contracted with Paypal to deliver funds. They delivered them... ie: you got what you paid for. Paypal used this arguement to keep from accepting chargebacks from consumers who were defrauded by JC Morris Co. BTW, the JC Morris incident is by FAR the largest internet fraid, over $1.5M. For some reason, the media hasn't caught on to it yet. The owner of the company has had himself declared incompetent in order to escape criminal and civil charges. You can read all about it here:
http://www.fatwallet.com/forums/messageview.cfm?start=2240&catid=24&threadid=53925The problem with this is that you did get what you paid for. You contracted with Paypal to deliver funds. They delivered them.. In this case I'd simply remain silent on the fact that I didn't get the goods - and allege the transaction was fraudulent - i.e., that someone used my card without permission.
Without cooperation from the seller (who likely would be long gone), PayPal would have a difficult and expensive time proving it was me that used the card. In this case the Fair Credit Billing Act would kick in and my loss would be limited to $50.