Sorry to hear about your problems man, its very upsetting for your son at Christmas, especially if he is young. I had a problem with Paypal about a year ago, it was so frustrating..... I brought a PS4 500GB Console with a game and paid for it etc etc.. then 48 hours later the seller refunded me, he said he was very sorry but the PS4 has stopped working, its faulty and will not switch on. (it was buy-it-now). I thought thats weird..but whatever at least I got a refund...
so I go to Paypal and it says I have received a refund, but it says "pending", then I see it can take a few days for the money to go in.. so I waited and waited but after 8 days it still said "pending", then I got another email from Paypal to say the refund had been "cancelled", so I was left with no money and nothing.. I contacted the seller but no reply, kept trying to contact but no reply, so I opened a dispute with Paypal, I finally got my money back but it took ages, absolutely disgusting, it was clear what happened so I should be refunded fast, but it took them long to finalize the dispute. Closed my Paypal account shortly after.
I hope you can resolve it, and you need to file fraud charges..