That's right, then you could in trouble. I mean if PayPal asks for a refund and there is no fund in your PayPal account. Then they debit it through your credit or debits cards. But I doubt if they will ever do that without your consent or approval. That possibility is quite limited I guess, even though I don't have any such experience with PayPal.
I read somewhere that if you got a negative balance in PayPal they can even employ collection agents to get the money from you. But is that possible in areas where they have no branches or business centers?
They might not be able to collect the money that they are after if you go negative, but they will put it on your credit report that everyone else uses, and blacklist you from being able to get loans, to rent or buy certain types of things, or get certain types of approval for more important things, like renting an apartment or buying a home in some cases.
They take out insurance on this too, and since they operate in the United States they add the debt that is owed to them to the Federal Reserve via FDIC insurance they carry in addition to any other type of insurance.
So really, they don't lose any money at all when you go negative, they are reimbursed for it, and can write it off at the same time. The only person who loses is the person who goes negative, and the citizens under that Federal Reserve bank that must pay back what others have lost when it gets added to the national deficit on what they say the people owe to the state or federal governments, and what those governments may owe to any other foreign government they borrow from short or long term.
The kicker is that once they are reimbursed for a debt that is passed off to the public, they are making 300% profit off of it: 1st time: Tax write-off as a loss. 2nd time: FDIC reimbursement at 100% (passed off onto the public), and 3rd time (if you pay it back) from the individual paying them part of what was owed through a 3rd party they subcontract to as a bill collector to get it for them, or 100% if they do the collections themselves in-house. It's a racket that lets them make 3x anything you ever borrowed from them, and that's not even including fractional lending from the FDIC to them in the first place (to where they only have to pay back 33 cents on the dollar if they borrow direct from the fed and the debt is not being passed off onto the citizens).
The only ones who get screwed over on this are the people who owe a debt that's already insured and written-off in advance, and the citizens who pay taxes that must pay it back once or twice on top of that.
So even if you live in a country or a location where Paypal cannot collect from you or your local or regional government prohibits them from being able to, they make other people pay for it instead even if they can't put it as a bad mark or on your credit score in that country.