I've used paypal on eBay a bunch of times, never in a private sale.
A guy down in the states has a bike part I want to buy. He wants me to send it as a "gift" so he can get around the $20 in fees.
I've googled this, and it seems to either be a scam, or not. There's no concise answer.
Having no experience in this matter, I turn to the wise brains of BCSB.