1. It is against PayPal's User Agreement to send payments for goods or services as "gifts" and this can get funds revoked, permissions revoked, accounts suspended, or accounts permanently frozen.
The rule,
PayPal User Agreement 4.1, includes a warning that the ability to receive gift payments will be revoked.
There is no protection of any kind for the buyer OR the seller when this option is used.
2. Asking a buyer to pay the fees as a way to circumvent this rule is fishy and can be read as violating PayPal's User Agreement.
Buyers are not supposed to pay sellers' fees. This does not mean that you cannot factor fees in to your selling price; the cost of making an item available for sale is always part of the consideration. If you want to offer an item at the price you originally paid for it, you will have to swallow the loss.
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