Buyers guide how to confirm your paypal address : eBay Guides

How a buyer can confirm an address.
1. Buyers can confirm their address by adding a debit or credit card to their PayPal account. PayPal will confirm the card billing address where possible (the address where you receive your card statement)
2. Buyers who is not able to confirm their addresses by the method above paypal offers additional options. Confirmation by phone or mail. The confirmation by mail is the most simple option,I recommend it as I've done it in the same way. Ask Paypal to send you a letter with the confirmation code. That is the easiest way to confirm your address.

How is address confirmation useful?
Address confirmation is useful because it provides a way for a seller to verify a buyer's identity. Delivery to a confirmed address, however, is not necessarily a requirement for coverage under the Seller Protection Policy since not all PayPal users are able to confirm their addresses. An Unconfirmed Address is not necessarily fraudulent but is sometimes inconvenient for legitimate buyers. If a transaction is eligible for coverage under the Seller Protection Policy, a seller must send to the address found on the Transaction Details page (regardless of whether that address is confirmed or not). For transactions that are ineligible for coverage under the Seller Protection Policy, we recommend that a seller send to a buyer's Confirmed Address.

The Purpose of a Confirmed Address
Although the vast majority of unconfirmed addresses are not fraudulent, PayPal offers confirmed addresses as an additional layer of fraud protection. Confirmed addresses help guard against stolen credit cards and identity theft and decrease sellers chances of receiving a chargeback.
                                                                                                                                                                                     (source:PayPal)
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