When you sell something online, scammers watch your every move.

Online con artists prey on sellers that don't understand the rules of using Paypal.

Jason Cole of Northeast Portland has bought and sold several hundred items using Paypal, but now he's out more than $400 because of what he calls a loophole in the rules.

An eBay user bought a big shipment of printer ink from Cole, but claimed the package never arrived.

“I have over 250 transactions and I've never had anything lost. This guy has had dozens of things that he claims have been lost,” said Cole

He sent the merchandise through the U.S. Postal Service and purchased insurance which shows the signature of the buyer, the delivery address in Delaware, even the postal carrier’s information.

Even with all this evidence, Paypal sided with the buyer.

Cole said, “He robbed me of this $400 and now I have to refund him the money. He gets my product and Paypal gave him the money back and I have to pay Paypal.”

Cole appears to have fallen victim to what's known as the "item not received scam." Paypal has a rule in it’s user policy that says transactions of more than $250 must have proof of receipt signed by the buyer which can be viewed on line.

Here's the catch -- Postal insurance signatures can't be viewed online, so they don't count. Only paying extra for delivery confirmation will protect you from crooks.

“He’s very knowledgeable and is exploiting the loophole,” said Cole.

Cole contacted more than a dozen other sellers who left negative feedback about the same e-bay buyer. He heard the same story over and over.

Cole said, “This guy lost $200 worth of items and like me he did not use delivery confirmation.”

All the apparent victims can't understand why Paypal allows this to keep happening.

Paypal and eBay officials did not return phone calls from Newschannel eight on Friday.

Your best protection when listing something on e-bay is to state that delivery confirmation will be used.

Shipments using UPS, FedEx and DHL automatically come with delivery confirmation. At the post office you have to ask for it.