Can Paypal Legally Collect?

Sometime back I had an item on ebay sell for around $85 and it went to paypal, after repeated shipping problems where the item kept coming back as return to sender, the buyer filed a dispute with paypal and paypal I thought wrongfully refunded the money back to this guy, even though I still had the item which came back to me after 2 repeated attempts to send but address was wrong or non existant, Paypal blocked all access to the account, whats funny is the account CANT RECIEVE MONEY, which I have tried to bring the negative up by sending money to it from another account I opened, but apparently this account is so shut out that you cant do nothing with it, now if theirs no way to put the account into the positive, how exactly do they collect? I have had I.C. Systems call me and just flat out ask me, how do I plan on resolving this........... I tell them when they get up off of their ass then I can proceed.

Quite frankly I am just to the point where I am not even going to pay nothing.

they did the same to me, i offered to settle this in court and they left me alone, did not even show up on my credit report and its been over a year. pay pal will take the money side every time right or wrong

paypal has the right to do anything they want. if you can prove deleivery the customer can get his money back no matter what i have over 10,000 verified transactions and 125,000 non verifed they dont care who you are they can take your money at anytime and lock you out paypal can also draft it out of your bank account

some of the steps in agreement

1. Our Relationship With You.

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1.7 Notices to PayPal. Except as otherwise stated below in section 12 (Errors and Unauthorized Transactions) and section 14 (Disputes with PayPal), notice to PayPal must be sent by postal mail to: PayPal, Inc., Attention: Legal Department, 2211 North First Street, San Jose, California 95131.
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2.3 Identity Authentication. You authorize PayPal, directly or through third parties, to make any inquiries we consider necessary to validate your identity. This may include asking you for further information, requiring you to take steps to confirm ownership of your email address or financial instruments, ordering a credit report and verifying your Information against third party databases or through other sources.
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3. Sending Money.

3.1 Sending Limits. We may, at our discretion, impose limits on the amount of money you can send through our Service. You can view your sending limit, if any, by logging into your Account and clicking on the View Limits link on the Account Overview page. If you have a Verified Account, we may increase your sending limits.
3.2 Default Payment Methods. When you make a payment, PayPal will fund your transaction in this order:

1. Balance
2. Instant Transfer from your bank account
3. PayPal Credit
4. Debit card
5. Credit card
6. eCheck

Note: We always use your Balance first. If you don't want to use your Balance, you can withdraw it before making a payment.
3.3 Preferred Payment Method. If you would like to select a Preferred Payment Method you may do so in these instances:

1. Each time you make a payment. Each time you make a payment, you may select a Preferred Payment Method. You may do so on the “Review Your Payment” page by clicking on the link to change your payment method and selecting from the available payment options.
2. In your Account Profile – Recurring Payments. If you have set up a Recurring or Automatic Payment, or authorized a merchant to charge your PayPal Account, you may select a Preferred Payment Method for all future payments to the merchant. You may do so by logging in to your Account, selecting “Profile”, selecting “Recurring Payments” or “Pay List”, and then by selecting the links to set a Preferred Payment Method (may be called “Backup Payment Method”).
3. In your Account Profile – PayPal Credit. If you have a PayPal Credit product, you may select it as your Preferred Payment Source for all future payments that you make through PayPal. You may do so by logging in to your Account, selecting “Profile”, selecting your PayPal Credit product, and then by selecting the links to set it as a Preferred Payment Source.
4. Limitations. If you have a Balance in your PayPal Account, PayPal will use your Balance instead of your Preferred Payment Method, unless your Preferred Payment Method is PayPal Credit or eCheck.
5. Quick Pay. If you select “Quick Pay” for your PayPal Mobile payments, you will not be able to select a Preferred Payment Method for your future PayPal Mobile payments made with Quick Pay. You may cancel your “Quick Pay” setting at any time from your mobile phone.