IMO its just so wrong to waste ombudsman time on pursuing paypal on the basis of this alleged "loophole".   Punch drunk when a seller posts to you something very expensive and it doesn't arrive, and you lose paypal claim and are out of pocket as seller provides postcode receipt that proves they could have sent your parcel or an empty box to an address in your suburb, you might then consider change your advice to others regarding this.

I'm not sure why I would need to change my advice when its correct.

Regardless of what any of us think of the law or paypal policies, they are what they are. Legally a seller is only responsible to get the item to the carrier, this has been established many times on this board.

Personally I would refund or replace if I thought an item was genuinely lost, but i'm not every body elses moral compass. Most of the people that come to these boards want their questions answered with facts rather than what others would like the facts to be.

All financial institutions have policies and guidelines they need to adhere to, the ombudsman is there to make sure they do. Its not wasting there time to ask them to do their job.