It's Paypal's fault if the company makes it appear that I have the money safely in hand... and then it turns out that I don't. If someone sends me a check, and I deposit it, within a day or two I know the money is mine and can't be yanked back.
Furthermore, they don't make it obvious that they'll do this. It's yet another "gotcha." As another commenter noted, Paypal is great, right up to the point you have a problem, at which point they're terrible to me.
No company is more indicative of the power of Metcalfe's law than this one: that another, less jerky company hasn't superseded them is amazing.
Not true. Any and all financial transactions are reversible, per US law.
They don't make it obvious that they'll do this
This is a standard policy for all electronic funds transfers, not specific to Paypal.
I have yet to lose on a chargeback or dispute.
That said, sweeping the PayPal balance to a real bank account is always the smart option.
I wrangled customer support, got nowhere, and had a fat negative balance in my account, but I figured I was okay -- until six months later, when I got sent to collections, when I gave collections the money and then sued Paypal in small claims court (this might not have been the wisest move in the world; given recent experiences: http://jseliger.com/2010/08/28/dont-rent-an-apartment-from-n... , I don't think I'd bother with the same course of action today). Their EULA says you can't do that, but they offered me half the money to make me go away, which I did.
The moral of the story: I no longer use Paypal. Ever. For anything.
Moral #2: the horror stories are real.
EDIT: One other thing -- if you are selling virtual services, Paypal will not back you up. If I'd been smarter, I would've shipped something to the client's address, with a tracking number, which might've helped me.