I’ve spent the last two hours reading a thread on the DigitalPoint forum about a guy/group of guys who were scamming people out of the domains names.
Here is the summary of how the scam works: let’s say you have a domain name for sale. Someone makes you an offer and pays you with PayPal. After you received a payment you push the domain to the buyer’s domain registrar. The moment the domain transfer is complete, the buyer makes a PayPal claim and reverses the transaction. As a result, you are left with no money and domain.
Making a PayPal claim is quite useless as only the transfer of physical goods is covered under PayPal policy. The domain registrar would not be of a big help either as they were not involved in a transaction.
It appears that the scammers use GoDaddy registrar to make this work. I have no idea why GoDaddy is better for scamming than other registrars but no other registrar was involved in this type of scams so far.
So, when selling domains do not use PayPal. Use other online payment processors like escrow.com or moneybookers.com or any other that guarantee that the payment would not be reversed once made.
Read the thread on DP, it is quite interesting.