If you sent via trackable means you have Paypal Seller Protection.

The chargeback is Paypal's issue, not yours, and probably has nothing to do with whether to goods were received, or their alleged condition. People seem to have found what they think is a loophole.

What further information does the bank want? I would have thought unauthorised use of a card was independent to anything the seller did or any information they can provide.

i would give them the info they want, though, THEN remind Paypal of their Seller Protection policy.