It's a chargeback. Paypal didn't tell you what you need to do?
You need to go to the open dispute on your paypal account and upload the evidence that you shipped where you were supposed to based on the transaction info.
Email confirmation of the shipping label purchased, including the address
Screenshot of the matching address on the ebay transaction page.
Screenshot of the delivery confirmation, showing delivery status.
Screenshot of the matching address on the paypal transaction page.
Once you prove that you shipped to the verified address, paypal should cover the chargeback in the event that the credit card company approves it. That is what Seller protection is all about.
You only have a few days to upload the info, so get cracking. After about 10-15 days you should get an email from paypal saying they have covered it. The case may remain open on your account for 2 to 3 months until the issue is resolved between the CC company and paypal.
Not sure when the money will get refunded to you though. As a high volume seller, I've reached a chargeback protection plateau that prevents automatic fund removal or holds on funds for these cases.
The rep from Paypal wasn't the most helpful and I had a work presentation that I had to get ready for. The above is great, thanks so much.