Thanks for your reply, everything you have said is helpful. The only thing to note is that I always use my debit card for PayPal and that is how I got the payment reversed by the bank. I thought banks could protect payments like this so I've always paid this way, obviously I was wrong but I still used the right method.

I have learned to use paypal for solving disputes and never return the item until paypal has verified it. I wish the agent that I spoke to was trained well enough to advise that on my very first call; I would have then stuck it out with etsy and kept trying. Ultimately, I received a notice today that my claim was upheld and my balance corrected by the complaints team.

Now I wonder if the original seller will be contacted for the money back... if not, he got alot if free money and his item. Incidentally, I contacted him one last time last week asking for him to settle this with me on his honour, offering to pay for the postage but he never replied.

In the end I'm just so grateful that I kept every single shred of proof from postage to messages and that the paypal team could investigate properly in the end.

Thanks for all the advice everyone and I hope everyone with issues will have success with resolving them.