Stopped Payment Problem

 

I made a refund payment in error and contacted Paypal immediately after doing so. The advisor told me that he was able to stop the payment as I had just made the transaction and it was active on his monitor. He confirmed it had been cancelled but also advised me to notify my bank of the cancellation. 2 months later, I receive an email from Paypal saying that my account is now limited with a negative balance for the amount that I had cancelled.  I contacted Paypal and they said they had paid the amount out of their money and I owe them.  They threatened me with legal action if I did not pay them.  I explained that it had been cancelled to which they argue that as it was cancelled by telephone then I have no evidence to support my statement and as such I must pay them. My account remains limited and I am unable to use it. The case is ongoing. 

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