There are a lot of fraudulent PayPal scam emails going around. 

PayPal is a great service but you need to protect your PayPal password just like you would your ATM password.  Watch out for email addresses or URLs like www.paypal.com@<something>.  If you see the @ it's bogus.

This is very important:

DO NOT use your email password as your PayPal password.  Since your email address is your paypal username, if someone gets your email password, then they have your PayPal username and password and access to every dollar in your bank account. 

Use a password which is different than any other account password, which can not be found in the dictionary and which include some special characters.  Myf0rd#1+ or LBE&33sme might be good.

Here an email from PayPal spelled out what to look out for in email scams (I have shortened it slightly):
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Please remember these steps to help protect your PayPal Account from Unauthorized Account Access.

Emails - Make sure they are sent from PayPal

1.  All emails that are sent from PayPal will be addressed using the customer's First and Last name

2.  Some spoof websites will send emails that pretend to come from PayPal to entice you to log in at the spoof URL. Be extremely cautious of emails that directs you to a website that asks for sensitive information.

3.  Stay safe; don't respond to emails asking for any of the following:

     Your password and email address combination
     Credit card numbers
     Bank account numbers
     Social security numbers
     Drivers license number
     First and Last Names

Always log into the PayPal site.  PayPal will only ask for information AFTER you have securely logged in.

Website pages - make sure that they are hosted by PayPal:

1.  When using the PayPal service, always ensure that the url address listed at the top of the browser is https://www.paypal.com/. The 's' ensures that the website is secure. Even if the URL contains the word 'PayPal', it may not be a PayPal webpage

2.  Look for the 'lock' symbol that appears in the lower right hand corner of the browser. This symbol indicates that it is a secure site. Do not download attachments , software updates, or any application to your computer via a link you received in an email. PayPal will not ask you to download anything for your account to work.

Passwords - keep it on PayPal

1.  Use a unique password for the PayPal account and change it every 30-60 days 
2.  The password should be one that is not used on any other site, service, or login

If you think you have received a fraudulent email, please forward the entire email to spoof@paypal.com and then delete it.

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Revised: 03/28/14.