Yeah, I got the same email about the same thing.
I called PayPal and after waiting on hold forever and "talking" to their "support" rep... this is what happens.
Basically, PayPal won't do anything to help you. They are in fact holding the money. They won't give you a refund unless you do this:
Send the seller an email requesting that they then email PayPal at
[email protected] requesting that PayPal give you your money back. PayPal says if they get such and email that they will do so.
I've already done this and am waiting for a reply back from the seller. No matter what, PayPal has seriously screwed up. They are holding their money, they can't get their money, but PayPal won't give you the money back without the sellers emailed permission.
PayPal encouraged me several times to file a complaint against the seller. I asked them why I would do that since PayPal is the one holding their money and all they would tell me is that I can do that or email the seller. I opt'd to email the seller for now, as why give the little guy a hard time and screw up their record if they haven't done anything wrong.
Ohh PayPal also told me this, after 180 days the funds will be released to the seller no matter what. So basically in 6 months they are going to get all of their money in their account. I asked them how intelligent that was and they didn't really have much of a reply. Basically I've never had a problem with PayPal in years, but I've now learned they are staffed by drunken monkeys with Downs.