I had the exact same thing happen to me with my iPhone 3GS. I sold it on eBay and sent it out with a tracking number. It said it had arrived, but the buyer contacted me a few days later to say he never got it. Working through eBay, I discovered that they would only reimburse the seller if the item is shipped with Signature Confirmation, not just a tracking number. It pays to read the seller agreement carefully.
So, sorry to say it, but there's a good chance he'll be without his phone and an empty wallet to show for it. With a number of recent changes, eBay has firmly landed on the side of the buyer, not the seller.
If he takes his money out of PayPal quickly, they'll just take him to a collection agency. No way around it.
Around the time I sold my 3GS, I also sold my mom's 3G. I jailbroke it and sent it out. The guy that got the phone gave me negative feedback because the phone wasn't unlocked (never said it was) and that I never told him that connecting it to his computer and doing a full restore would get rid of the jailbreak. And, guess what? eBay sided with the buyer and refused to take down the negative feedback. It hurt my auctions for months.
Finally, the guy got kicked off eBay and the feedback disappeared. But, it just shows how one-sided eBay is.
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if he has delivery confirmation, then it's the seller's responsibility to go thru the shipping company. Make sure he keeps that confirmation, and gives it to ebay when he gets the complaint.
Not true, unfortunately. The thinking is the phone could have been delivered to the wrong house. eBay and Paypal will side with the buyer every time. Signature confirmation is the only 100% foolproof way of winning a dispute.