First of all, with my auctions there is nothing to dispute, as every auction is as-is, no returns, final sale. Holding the funds is academic because the terms in the description clearly states this. I get great responses to my auctions because the pictures are very clear and I probably post 3 substantial paragraphs of very pertinent information, usually more than the prospective buyer would even think to ask. In short, I leave no room for disappointment because the last thing I want is to have to revisit the issue, so integrity is paramount. When my package is dropped for shipment, I know 100% that auction is behind me. So again, when the auction description states no refunds or returns (there's a check box to indicate this when creating the auction details), PayPal knows this is the criteria, therefore there's no reason to hold anything. Here's how one seller expressed their payment terms on an auction I saw today: "PayPal payment due 48 hrs after sale ends. Unit ships after paypal funds are actually transfered to my account - typically 3-4 days after you initiate payment". As an alternative, "new" sellers should simply say, "as a result of PayPal holding funds for 21 days, unit will ship when funds are transferred. Please do not bid on this item if you are not agreeable to this, as these are the terms. My apologies for this inconvenience". Only if people would care enough to support each other and complain to eBay, buyers and sellers alike, can change be a possibility.
I have to agree with the person holding the item and my empathy is with them. Selling on eBay has always been about receiving the payment before the item ships, period. New rules or not, it's unacceptable PayPal forces themselves to police sales that have no recourse as per item description. Some will choose to succumb to this money-hostage scheme because they do not want to be deprived selling on eBay. Well, that's a very sad exchange of self-respect as a result of being bullied. Apologists will find a way to justify PayPal's actions, but I found myself doing fine with Audiogon and the like, and after one sale back on eBay and I remember why I stopped in the first place. PayPal. At that time it was against the buyer, forcing buyers and sellers to use PayPal instead of money orders. Of course eBay owns PayPal and "safety" was a red herring to justify the forced additional fees.
Anyway, there's another angle to consider. There's no explanation in the world that will ever validate why PayPal appoints themselves as an escrow device, especially when sales are stated as final.