We have had such an issue with international Paypal payments lately we felt we had to make a specific web page to inform everyone of the problem. This mostly pertains to the eBay auctions that we run but also affects our web store.
Here is an example of what we have encountered, lately. John from the UK makes a purchase on eBay for one of our auctions. John then proceeds to pay with Paypal, everything on his end seems fine. We at EHS Racing receive the payment and notice that it is from an unconfirmed/verified address. We refund the payment to them and send an email stating why.
John then finds the payment was refunded and has no idea why. According to paypal everything is verified and ok, he then proceeds to ask us why and what the problem is. Here is what we see from about 90% of the international payments that come to us through paypal.
When we as sellers see is that the address is unverified or unconfirmed this means we are not protected by any of paypal seller protection policies. Basically if we take the chance of shipping to this address and a complaint of any type arises whether it be our fault or not more than likely we will lose the payment that we received. We hear a lot from customers "I use paypal all the time to pay businesses in the States and no one else denies it" more than likely those businesses have not lost money to paypal for not following there meticulous rules. It only takes one time of losing several thousand dollars before you become strict on how your business receives money.
Honestly we feel Paypal is to blame here they want you as customers so they can get the fees they take from us sellers (which we have no problem with). But they do not want to take any of the responsibilities that come with processing the international payments. If a dispute ever arises they just take the money from us sellers and don't worry about anything and tell us we did not follow there guidelines. This we have a problem with and we feel its fraudulent to make you believe that you are meeting the requirements but in turn showing us as sellers you are not.
If you have any questions please feel free to contact us we ship internationally all the time we just have to protect ourselves. We apologize for any inconvenience that arise from using paypal to pay EHS Racing but we feel its a necessary measure to refund payments that do not meet the requirements set forth by paypal.
Also more info can be found under International Shipping Policies here http://www.ehsracing.com/shipping_returns.htm