Paypal typicall takes no stance for the buyer or the seller when dealing in virtual goods. So money is transferred, nothing happens. Problem is that buyer will use a compromised account to buy it and sellers will take advantage of the fact that paypal won't reverse the money because the item was virtual.

Sellers however will get their account locked and money frozen after too many complaints.

I know this because I've designed and created a ton of websites and software around Paypals payment solution with regard to virtual goods.