It wouldn't be fair (probably illegal too) to claim unauthorized use because it's not what happened.
It's also not fair that some guy who appeared "trusted" took this guy for a ride and scammed him. Claiming unauthorized use is the lesser of the two evils, by far.
The problem is that by doing so, you screw over a site that wasn't directly involved in the trade (gta multplayer thing), as well as putting pressure on PayPal.
@OP, glad you reported the story correctly. I'm not sure I like your chances for a refund, best of luck though!