FYI you are STILL at major risk using the gift option.
there is a loophole where paypal gift can be used to defraud THE SELLER.
I hesitate to share this info, but I think people should know and protect themselves.
Here's the scenario:
The seller asks for the funds to be paid as GIFT, thinking this offers protection for the seller.
The buyer sends a paypal gift using a credit card by clicking on the pay the associated paypal fees option. (I am paraphrasing the exact option here.)
The recipient of the payment (seller) receives the GIFT payment and the full amount shows up in their account as a gift.
Everything looks okay so the seller ships the watch.
Days or weeks later, the fraudster buyer will issue a chargeback with their credit card company by claiming that their credit card was stolen, etc. The lies are easy.
Credit card company will issue a chargeback, and in response, Paypal will hold the associated funds--which are now in the seller's account.
Because this was a GIFT transaction, as far as Paypal is concerned, there was no sale or exchange of goods.
Because there was no sale, the seller cannot use shipment confirmation to argue a legitimate transaction. Evidence of shipment means nothing when there was no official exchange of goods.*
Seller's funds are held/retracted and buyer gets a free watch.
LESSON: DO NOT ACCEPT PAYPAL "GIFT" PAYMENTS IF YOU ARE A SELLER.
*NOTE: If the PayPal transaction occurred using the "item or service" option, then the seller can at least try to fight chargeback fraud by submitting proof of shipping and/or delivery.
