I would in a heart beat, wouldn't have to even think about it:
1) Return his PayPal money
2) Block him forever from buying anything from you
They may have found in your favor but even if he sent $1.71 and you sent him the chip he would leave you negative feedback and eBay will not do a damn thing about it. It's all for the buyers on eBay and not the sellers.
Just my opinion.
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