dont send it back, tell paypal to sod off and point them to this site and to the fact the ebay is a fraud site who have been informed of hacked player many many times but done nothing - send it back and you will see no money, hassle paypal again, dont email, phone them
like i said, ebay is also at massive fault here by bot listening to anyone about these problems, see also this site for a full site on the fraud that goes on on ebay with regards to flash memory based devices
H2testw 1.4 – Gold Standard In Detecting USB Counterfeit Drives SOSFakeFlash
get back to paypal and get your money back, dont send it back