Anything is possible where Paypal are concerned, I have posted about them many times before.
What the company you bought from may well be telling you the truth, I have money in my paypal account that I can effectively do little with because, for some reason best known to themselves, paypal have decided they don`t recognise the bank account I have attached to my account, even though it is the same account that has been there for 5 years.
It`s not your problem though of course, and you should be entitled to your refund regardless of what paypal are up to. I find it very hard to believe that any company deal EXCLUSIVELY via paypal, surely in this case they could issue you with a bank transfer, or even a cheque??
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