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paypal failed refund??

Quick story outline first - i bought a phone £95 paid via paypal from paypal funds. Item never arrived , no comms from seller so i opened a INR via ebay. Seller responded saying they would give a full refund as they had never even posted it?! (this was nearly two weeks after i'd paid!) they issued a refund via eCheck and ebay automatically closed the dispute. The eCheck hasn't cleared and paypal just sent an e-mail to say refund failed as it didn't clear from the sellers bank. I emailed them for an explanation and they've said they can't do anything I need to contact ebay , which I have done and i'm waiting for a reply.

What is likely to happen here? surely they have to refund me as thats the whole point of buyer protection , isn't it??? I've got a very uneasy feeling about it knowing how they seem to make the rules up as they go along half the time!

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