This is a common PayPal scam. One of the perks of PayPal is that they will protect you for any purchases made through their service. If you are a seller you have a PayPal account (which is tied to a live bank account) and if someone disputes a purchase, the first thing PayPal will do is refund the purchaser's money by deducting from your account before the dispute is investigated. (If you try to protect yourself by removing the money paid to your account immediately, when PayPal comes and deducts the payment amount, you could be liable for overdraft fees if you keep a separate account just for PayPal transactions.) Even if the investigation eventually works out in the seller's favor, by that time the purchaser has got the item they "purchased" and a refund of his money and disappeared (getting the item for free). This usually happens with bigger ticket items.
When I was selling my previous boat via Craigslist, I was approached in this manner. Some of the contacts I got were pretty preposterous, but they all insisted that PayPal be used to pay for the boat. The idea was to get my boat than then get their money back based on some perceived difference between the CL description and the condition of the boat. Some searching on the internet described this particular scam. If you look at some ads on CL you will find that they quite often explicitly say "no PayPal".
If you sell anything and use PayPal as the payment service, you need to be very careful about what you sell and how you describe it (the words "as is" are very important). If anything about the thing you are selling and anything in the item description don't jibe, and the purchaser complains, PayPal will refund the purchase price paid.
My guess is that since you used PayPal for payment on the burgees someone is trying to say to PayPal that he ordered one and didn't receive it when he was supposed to. PayPal will refund the amount he said that he paid with money from your amount (although PayPal should check that he actually made a purchase first and he should have waited until the item was received). Eventually you will prevail and PayPal may refund the money they took from your account, but the burden is on you to prove you performed as you said you would or the item is as you described, not on the claimant to prove that you didn't or it wasn't.
PayPal was a great idea. However, some people have found a way to exploit it, making it something people should be wary of instead of something that makes purchasing things on the internet easier.
