eBay management admit that fraud is a major issue and that their
studies show that fraud is beginning to have a negative impact on the
userbase numbers and on the probability that users will return to shop
on the site.  I would think that this would be of some concern to
anyone interested in investing with eBay.  If someone had been posting
to the Enron finance boards about malfeasance before the company
imploded, would you have had the same opinion?

You say that sellers should insure their items.  That is a good idea,
but did you know that there is a loophole in Paypal policy that allows
buyers to get their money back without bothering to file or cooperate
with insurance claims?  There is.  Does this affect the finances of
the site/company?  Yep.  If a buyer buys and item and seller insures
it, yet it still ends up broken in shipment, the buyer can file an
SNAD (significantly not as described) claim.  Paypal immediately takes
the money from the seller's account and holds it, pending proof of
return of the merchandise to seller.  (Paypal could simply make buyer
provide proof that an insurance claim was filed, but they don't).
Once the buyer returns the damaged item (ie. shows paypal the
confirmation of delivery), Paypal then gives the money that was on
hold from the seller, back to the buyer.

At this point, the seller (who has done nothing wrong) is out their
money and their item, and the buyer has their money back.  The seller
can then file a claim that the item was not returned in the same
condition it was sent.  Duh, of course it wasn't, that was the basis
of the first claim.  Paypal will then issue a "courtesy credit" to the
seller.  So now the seller has their money and the damaged item, and
the buyer has their money back.  Paypal pays the courtesy credit out
of their funds.

This is just one instance of how Paypal management's policies result
in lost revenue for the company.  Add to that the amount of time
devoted to such a claim (hours at least), multiply that by thousands
of transactions, and you have some serious un-needed waste.