I have a paypal account myself. Both my bank account and visa check card are tied to it. I've had my account pretty much since Paypal came into existance, and have not had one single issue with it.
I do follow some common-sense safety tips (these are ones I give to clients on a handy little reference sheet):
What to do in the event of a questionable internet situation:
First, take a couple of breaths, and calm down as much as possible. Keeping a level head helps save you money.
#1: NEVER GIVE YOUR PASSWORD TO ANYONE, not even if they are family!!
#2: NEVER FOLLOW ANY LINKS IN EMAILS TO WEBSITES, unless you are signing up for an account and it needs activation (like this forum).
#3: Keep your password on a peice of paper in your wallet, or somewhere safe, so you do not forget it.
#4: Change your password often, and keep note of it. Once every 90 days is more than sufficient.
#5: Never give your password to ANYONE that calls you and asks for it. ALWAYS to go the main site that you signed up at, and enter it there.
#6: DON'T CLICK ON ANYTHING THAT SAYS YOU'VE WON, FREE, OR FLASHES.
#7: Nothing is truely free on the internet.
#8: In the event that you notice a transaction that you or a loved-one did not make, contact the bank, credit card, paypal (if involved), ebay, and the seller. Change your passwords ASAP, including your bank password (if you have online bank access). Change your card pin numbers as well.
#9: Run anti-virus and spyware cleanouts at a regular interval (at least every other day), or call me and set up an appointment. If you think your computer has ANY spyware on it, please do NOT enter any passwords or credit card numbers on it, and keep it off the internet until the spyware is removed.
If you guys want to, you can copy this sheet and give it to people you know/clients.