The way I see it, it works this way.

When you list on eBay you create a contract where you agree, amongst other things, that, if you fall within what they (eBay) define as a high risk seller, you allow PayPal to limit access to your account, and they have been very liberal – in fact too liberal - in defining who is a high risk seller is.  For instance where the policy identifies sellers with a limited sales history as falling within the definition, eBay staff interpret that to mean any new account, including new accounts opened by already established sellers with a proven track record. However that contract cuts both ways.  That is, there is no such thing as a one sided contract.  To be valid both sides must benefit from it.

But simply limiting access achieves little. That is, aside from maybe getting a bit of extra interest whilst the funds are on hold, limiting a seller’s access to their funds actually achieves very little - enter the eBay Money Back Guarantee, which coincidently came into existence at about the same time.

Now unlike PayPal Buyer Protection, where refunds are limited to where the buyer can establish a right to recover, the eBay Money Back Guarantee actually underwrites the buyer’s risk inherent with distance trading.  That is, it is a form of insurance whereas PayPal is not.  Now ordinarily, if an insurer, having paid a claim believes a right of recovery exists, and if the person from whom they attempting to recover say no, then the only way they can get the other party to pay up is to prove the existence of the debt by taking them to court. 

However eBay have found another way.   Make it a further condition of listing on the site that, if the buyer makes a claim, and if eBay finds for the buyer, and if having paid they claim they believe a right of recovery exists, they can reimburse themselves for monies contained in the sellers PayPal account. No need to prove the existence of a right to recover as a simple assertion to that effect will suffice.  Again, there is no such thing as a one sided contract.  To be valid both sides must benefit from it and it is difficult to find any benefit that the seller obtains from this process.

So why go to all this trouble when PayPal Buyer Protection did pretty much the same thing.  The biggest flaw in PayPal Buyer Protection (from eBay’s perspective that is) was the ease with which a seller could dispute the decision that a right of recover existed – simply file a complaint with the ombudsman and let them decide, with in most cases the outcome being the decision was overturned.  Then, as more and more seller became aware of their right to dispute, there was an ever increasing requirement for PayPal to resolve buyer claims by making discretionary payments. 

The eBay Money Back Guarantee solved this problem.  That is, though PayPal is holding the funds it’s eBay who’s making the decision and as it is eBay who has made the decision, and as eBay is not a financial instruction, the ombudsman had been taken out of the loop. 

So how do you get the ombudsman involved when the whole process is designed to exclude them?  Force PayPal to make a decision and it is that decision you dispute.  Now I’ve shown you one way to do it.  If someone has a better idea I’m all ears.