You raise some valid points digitalghost, especially your last paragraph. I have since discovered that the buyer has left a total of fourteen (14) negative feedback transactions regarding 'item not received' and 'not as decribed' in the past 12 months, with one seller even mirroring my experience where he escalated to a claim pronto. 14 in the last 12 months seems excessive to me, I understand things go missing in the mail periodically but you can't be this unlucky surely. I'm confident that if I went back further than 12 months I would find similar instances of this feedback.

Yes, the buyer did communicate with me, albeit briefly after he received the goods in the mail. The conversation consisted basically of 'where is my camera?' and my responding that I had packed it in the box. While I was actually on hold to Australia Post I received an email from Paypal for a dispute and then a claim. There was precisely 9 minutes between the notification of a dispute and then a claim.

The buyer has won the PayPal dispute as of today, and has 10 days to ship whatever the buyer claims he got back to me. As I understand it, only then is PayPal/myself obligated to issue a refund.

Australia Post are investigating the matter but I do not expect them to rule in my favour as the item was delivered as far as they are concerned, and there was no damage or theft to the article in transit according to their representative. They are doing an investigation anyway, but it would take a very determined courier to get into the package, steal the camera, and then re-tape the package. It was heavily fortified with tape and bubblewrap and to deliver the item in a state that was apparently untampered with to the buyer is an amazing feat indeed.

I have made a complaint about the dispute to Paypal including the relevant information I have gleaned since then (the claim was opened so quickly that I had to combine all of my knowledge into one single response on the fly, without the ability to add more information as it came to hand). Moreover the complaint to Paypal will allow me to open a case with the FOS if necessary.

Thanks for your insightful post dg.