The two ways I try to cover myself with Paypal are 1)the bank account tied to it is usually at $0; I move all $$ out of it as soon as it goes in. 2) I use American Express as the cc with Paypal as they are definately the most responsive for the consumer when it comes to questionable charges, etc.
My current Paypal beef is a chargeback from a dirtball that I sent stuff to via Fedex Signature required. Paypal listed chargeback from the creditcard co. with reason being 'unautherized charge'. I thought that is what we have a middleman like Paypal for in the first place; to make sure the person paying is the person I am sending to hence the 'Confirmed' shipping address?? Those turkeys better cover me in their 'Seller's Protection plan'...