Paypal keeps money when money transferred to account that is limited

[KenSnyder007]

I sent money to a person whose account is limited.  So he can not extract the money but Paypal won't refund the money either.

So basically Paypal is just keeping the money.  How is this legal?

[kernowlass]

@KenSnyder007 

If you paid via goods/services then open a dispute for non receipt of item?