Product: Credit card or prepaid card

I'm filing this complaint because a serious legal issue arises from the dispute, i.e., where PayPal has been informed that an online transaction is likely fraud before payment has been sent by PayPal, does it have a right to continue the payment to the fraudster at the sacrifice of the consumer? Is it legally allowed to collude with fraudulent businesses to defraud consumers of their funds? Is it against public policy to serve fraudulent businesses after being informed of the fraud? 
Following is a complaint sent to PayPal, to which it has refused : I purchased 3 folding tables on the website of XXXX XXXX XXXX on XX/XX/2021 in an amount of {$140.00} ( {$49.00} each. No Tax!!!!!! Please see attached snapshot capture for purchase details. ) On XX/XX/2021, I received an email with so-called shipping information from the merchant with a tracking number XXXX. The shipper was USPS. I tracked the shipping immediately. It shows that the item has been successfully delivered. This confirmed my suspect that the merchant was a scammer. In addition, the merchant added that If you have questions about the shipment, please contact XXXX. The email was evidently not a valid business email account. 
I became alert because of the XXXX tax in view of its alleged location of California notorious for its taxes. So I called the Paypal customer service the other day on XX/XX/2021. The young lady that answered the call was very nice. I told her that the merchant could be a scammer. I explained to her why I believed it was a scammer, including the email address and the tracking information. I asked her to report to the investigation department or legal department, which I assumed to have one as Paypal is a large company, to make an independent investigation into the merchant or report to FBI so as to crack down on the scammers. 
The young lady was very nice and cooperative. She told me that the funds were still there, not yet paid to the merchant ; that shed create a ticket and place the funds on hold, and would contact the merchant ; if the merchant does not dispute, the funds would be returned to my bank account. 
She later sent the ticket to my email account. 
On XX/XX/2021, I received an update on my case : Your claim regarding the purchase you made on XX/XX/2021 for {$140.00} USD has been escalated and we have asked your seller for more information. Most claims are resolved within 30 days, but it may take longer. 
I was happy to get the update and believed that the funds would be refunded to my account. 
Unfortunately, on XX/XX/2021, I received the decision from Paypal : We have reviewed this transaction ( s ) and are denying your case ( s ). This decision was made because we received shipment tracking from the merchant confirming that the merchandise was delivered.

We're sorry for any problems you may have experienced with the transaction ( s ). 
Its extremely wrong for Paypal to intentionally release the funds when it had been alerted of the fraud simply because of the fraudulent shipping information, which I had already told Paypal in the phone report. 
Paypal is guilty of indulging fraudsters in e-commerce. 
I claim refund of the funds of {$140.00} and a compensation of {$600.00} for damages arising from its intentional indulging of ecommerce fraud and damage to the public interest.