Buyer returned junk item to seller with eBay's good graces. As the seller says eBay and PayPal collected their fees, including fee on shipping charges. eBay knows that the buyer will probably buy another item. They will profit again and again and again from buyer fraud.
Since when did a companies return policy override fraud laws? A company profiting from FRAUD which this example clearly demonstrates must be illegal. Calling this behavior a racket might be a stretch, but the fact IS eBay and PayPal are indeed profiting from buyer return fraud by collecting sellers fees. Our blog post is here.