not true, the majority of eBay sales, paid with PayPal are covered by PayPal's BUYER protection  (there are a few items that are exempt, including gift cards, concert tickets, et) if the seller has no funds, PayPal pay from their own fund and pursue the seller at a later date (without it impacting on the buyer)

Just speaking fro the experience of the 2 times PayPal has let me down in the past that's all.