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I am not sure from your facts if you have filed a formal complaint with PayPal or not yet? I saw that you had sent two money requests, but I believe these are different than an actual formal complaint. I would try this first, especially if you have an email from the seller agreeing to cancel the sale. Paypal can simply pull the money from his account and redeposit it in yours without the seller's consent.
If you have tried this, or if you try it without success, the next step would be to file a complaint against this man's business in AZ with the AZ attorney general. The AG is a state agency that regulates all businesses in AZ. Since you are in PR, I would highly advise that you consider this before taking any legal action. You can file the complaint online: http://www.azag.gov/consumer/complaintform.html The AG will mediate the claim between the two of you. They cannot sue on your behalf, but they have the authority to fine the business and/or bring any other administrative remedies against it if it does not comply with returning your money. Fraud, fraudulent inducement, breach of contract, deceptive trade practices, etc. are all buzz words that really get the AG's attention. I am sure you know all about those.
Your last remedy would be to file a small claims action in the county where this business is located. This would be rather expensive, and it may be cost prohibitive since you would have to come over from PR. The judge will have discretion on whether you can recoup your fees for your travel. Usually, they are not included. However, I do believe you would be successful on your claim since you have the email where the man has agreed to cancel the order.
Thanks for clarifying about the Paypal complaint. Definitely try the AG's office, as I have had a lot of sucess with them with my clients throughout the years. I say you have about a 75% chance there. If that doesn't work, a small claims action is in order. I will leave this post open in case you need any additional help with this matter. Please don't forget to accept my answer so I can receive the proper credit for helping you. Thanks for using Justanswer.com!