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!
I understand what you are saying completely, however those sites make money off of virtual goods. For them to refund the person who was defrauded and terminate the client of theirs who defrauded anyone using their site would be the right thing to do. The hard truth is, they do not care. They will not cancel his membership nor will they. For this reason, I have no heavy heart for them. I spoke with them and they understand what happened and from their own confirmation, it has happened before and because they have not taken any action to prevent it, they are only helping these scammers fuel the fire. Companies like them will not put their foot down and say, "you will not use our software to rip people off". So in my opinion, they are part of the problem.