But so what? You knew what sort of firm they were before you started this project, and while they may have their heads under a rock it's not really their responsibility to understand every business model out there, or to explain all the many ways that people have tried to scam them. To be honest, I think you ought to have had a chat with your legal counsel before setting the ball rolling; given that Paypal has a reputation for being inflexible with merchants, you could have been better prepared in terms of either your business structure or finding out what documentation they'd want to release your funds.