No matter what PayPal decides/decided, or name calling, or threats, or ignorance of law, or if your TOS/Ad states "deposits are non-refundable", etc., if the Seller backs out of a deal (or does not follow through with a deal), the seller has no right to keep a buyer's deposit.
The only way a seller would have the right, to keep a "nonrefundable" deposit, is if the Buyer backed out on the deal.
Also, it is foolish to ship something prior to receiving full payment. Furthermore, if a buyer states he/she will send the rest of the payment after being shown proof that a critter was shipped, it should really make seller run away from such a transaction.
However, in this case, it was agreed to and, if it was agreed to, one cannot use the speculation, of a possible scam, as an excuse to keep the deposit when shipping never occurred (and, thus, no scam occurred).
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