100% wrong.
1) PayPal protects any purchase as long as you paid by normal checkout and not as gift, payment owed, or personal payment. Their policy:
Purchase Protection covers all your online purchases, on eBay or on any other website, when you use PayPal. It also covers you when you make a payment on our website. You must open a dispute within 45 days of your purchase or payment to initiate the Purchase Protection process. Finally, your account must be in good standing with us to get Purchase Protection.
Purchase Protection does not cover certain kinds of purchases. These include: digital goods (intangible items), services, real estate, motorized vehicles (of any kind), custom made items, travel tickets, industrial machinery (for manufacturing), prepaid cards, or items that violate our policies or eBay’s policies (stuff that’s usually prohibited by law anyway). Purchase Protection also does not cover items that you purchase in person, or money you send to friends and family.
AND PayPal used to only refund if the seller had the money in his account, but NOT ANY MORE. The seller can have ZERO $$ in their account and they will still refund you 100% no matter if its an eBay purchase or online website purchase.
In your situation, you must have explained the situation to them in a wrong way. I have had to return dozens and dozens of items and never had one single problem. Things broken, or item not described correctly. Always have been refunded 100%.
Also your better off calling PayPal instead of filing online and explaining the situation to a live customer service rep. They will tell you if you qualify for a return and will file the return for you.
If you file a return, you need to make sure you get tracking info one you mail the item back. Once the item is back to the seller and PayPal has on file the tracking# to show that it was returned, you get refunded 100% what you paid (just usually not the returned shipping costs unless seller agrees to pay that for you).