If I intercept the package then I have to pay UPS another $15. Then if the transaction is legit, another $20 to re-ship it. So I'd be out $55.
I mean arent I protected by seller protection since I did everything they asked of me? Or are you saying they can go back on their word?
Check the details section of your Paypal transaction page. If the transaction is specified as "eligible" your seller protection will cover you for unauthorized use of a credit card. This is assuming you met the other eligibility criteria which is to ship within seven days and signature confirmation.
This is pretty black and white so I can't see how they can go back on their word.