I frequently visit the various domain forums, and I am often surprised by the lack of common sense exhibited by some people who are too trusting. Accepting a direct Paypal payment directly from a buyer on a transaction over a few hundred dollars can pose a significant risk. Apparently it isn’t too difficult to request a chargeback, and once the domain name is transferred, if a chargeback is requested, it may be difficult to reclaim the name. This would remove the money from the seller’s account, while the buyer can retain possession of the domain name.
Another thing that seems to occur too often is payment for domain names using a stolen or compromised Paypal account. When the actual account owner learns of the charges and requests a chargeback, the domain seller is once again left without the domain name and an empty bank account.
The most simple way to avoid this is to use common sense. If you are completing a deal with someone who you’ve never met or heard of, it is always best to use an escrow service such as Escrow.com or Moniker. If that person refuses to use an escrow service, it is probably better to avoid the transaction. If you have a sneaking suspicion that something is amiss, its always best to trust your gut.