PayPal does not offer protection for domain name sales and that needs to be understood so everything is on the seller's shoulders.
As others have said keep record of everything, even though it won't necessarily help in case of disputes; even if they send as a gift ( keep in mind that if the buyer has a PP business account he won't be able to send gifts ) they can still charge back.
With that said in my personal experience of 3 years I have never had a charge back or any other issue. Simply choose the people you do business with, wisely and if you are not sure about them find an alternative way to complete the transaction.