New Paypal trick

Has anybody seen this before? The seller marks the item as shipped and pays the postage electronically, generating a tracking number, but never actually mails the item. Paypal won't let me open a case because they say the item is enroute, though the USPS says it was never entered into their system. It's been more than two weeks since the auction and the seller has both my money and (as far as I know) the item as well.
What should I do?
What should I do?
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