That is the case now, yes, but I don't recall that being the case at the time. That said, we are talking sixteen years ago.

Regardless, I would not recommend any business accept PayPal unless you are large enough to get their attention. There are far too many stories out there like OP's, of individuals, as well as small and medium sized businesses, getting absolutely hosed by some automated algorithm at PayPal and having zero recourse to even find out what happened. Customer "service" is nonexistent there. In my opinion, the only thing PayPal is good for is sending money between people.

Short of filing a lawsuit, and you probably can't even do that because they now have an arbitration agreement in their terms.