Sold an item on ebay, sent the item, don't have the item and paypal says I owe them..

[HP10T]

What is the name of your state?
Utah

I sold an item on ebay. Sent it with delivery confirmation. The buyer received the item. Opened a dispute with Paypal saying that the item didn't work which was false but doesn't matter here. The dispute was closed without me knowing and next thing I know I have a negative balance for the amount that I sold the item on Ebay for. Now paypal states that I owe them for the amount I sold the item for and I never received the item back. My question is, What rights do I have in this scenario since I neither have the product nor the money since I have to pay paypal back. What steps would I take to resolve this as Paypal does not help me in any way when I contact them to resolve this.

 

[CameronNewport]

PayPal User Agreement:

13.7 Claims Procedures. If you escalate a Dispute into a Claim, we will gather information from you and the seller and determine eligibility for reimbursement under the Buyer Protection Programs. Here are some important things to remember about the Claim process:

1. If a buyer files a Claim asserting receipt of a Significantly Not as Described item, we will generally require the buyer to return the item to the seller at the buyers expense and to Viewable Online Proof of Delivery. If the item is over $250.00 USD or equivalent, Viewable Online Signature Confirmation must also accompany the Viewable Online Proof of Delivery. In some circumstances, we may require the buyer to send the item to us or to a third party specified by us, to obtain documentation from a qualified third party substantiating the Claim, or to provide evidence that the item has been destroyed. In some instances, we may ask a buyer to support a Claim by filing and supplying a copy of a police report.

If I were you, I'd inform PayPal that the item was not shipped back and ask for the Proof of Delivery.

Outside of PayPal, you can sue the buyer for breach of contract. Since you're the seller, your state probably has jurisdiction. If you win, you'll need to have the judgment domesticated in the buyer's state in order to enforce it.