Lost in mail is a tough one. It happens, though rarely. But it's a trivial thing to lie about by either side. In truth, if something is really lost in the mail and uninsured, neither side deserves to be out the money or to get negative feedback. But either side could also be lying.

The only answers, I suspect, for low-reputation users, are to only use shipment methods that include delivery confirmation, or to buy insurance which is often overpriced. This is where paypal shipping does have a big advantage, as it gets delivery confirmation very cheaply.

Doing a trackable method should be recommended standard course for sellers with under 50 transactions. After that you can be declared trustable enough to use untracked USPS.