What should they be doing about it? How do they determine whether you were scammed, or you're now scamming the domain/development seller to get whatever you bou

What should they be doing about it? How do they determine whether you were scammed, or you're now scamming the domain/development seller to get whatever you bought for free? As any merchant doing any volume will tell you, the latter is the more common case! A scamming seller will get enough disputes that they'll lose the account fairly quickly, but there's a couple billion buyers out there for whom risking a PayPal account to get free product/service is no big deal. It's not really something a payment service SHOULD be deciding. That's the job of small claims court.