PayPal, the payment service used by 20 million online shoppers in Britain, has given in to consumer demands to offer full refunds to buyers defrauded on eBay.

Previously, anyone using PayPal to buy items such as a laptop or furniture risked losing hundreds of pounds on something that might not work or even arrive.

Consumers who buy an item worth more than £150 using PayPal on eBay will now have protection.

The decision to remove the present limits comes after years of pressure from PayPal users, who make up more than half of all UK eBay members. They felt that the previous limits were unfair and made eBay shopping less safe than buying on the high street.

Thousands of comments left on websites such as paypalsucks.com and paypalwarning.com detail dissatisfaction with PayPal’s dispute resolution service.

PayPal said that since 2002, when it was bought by eBay, it had received a substantial number of complaints from buyers about the old protection levels.

Its old buyer protection scheme was limited to £500 per purchase if the seller had 98 per cent or more “positive feedback”, falling to a maximum of £150 if the seller had a lower score, leaving anyone who bought anything above those limits unable to obtain a full refund.

A spokesman for Paypal said: “It’s something we’ve been considering for a little while, given feedback from buyers and sellers who told us they wanted better protection for when things go wrong.

“They also told us that the current arrangements are rather complicated — such as only applying the current higher cover limit [of £500] for purchases from the eBay sellers with the best feedback.

“Obviously there are still some conditions, but these are much easier to follow.”

Consumer groups said that the new protection limits, which will also give sellers unlimited protection from buyers who do not pay up, still do not go far enough.

The new protection does not cover “intangible goods” such as airline tickets, or motor vehicles, nor does it offer protection for users who have had their PayPal accounts hacked into and cleaned out by fraudulent buyers.

Buyers using PayPal to fund purchases from other online retailers, such as Topshop, Skype and Photobox, will also be without the new cover.

If these customers want a refund, the amount they can claim will be limited to what is in the seller’s PayPal account. Anyone who uses PayPal and their credit card together will also forgo their rights to a refund from their card provider should PayPal refuse their claim.