How can eBay allow this to happen???
They don't.
There is a system in place for reporting items Not Received or unsatisfactory. At the bottom of this page under Resolution Centre.
There is a 45 day deadline on this service.
In addition, unhappy buyers can leave feedback and Detailed Seller Ratings for 60 days after purchase and Responses to earlier feedback indefinitely.
If you back your PP account with a credit card, you can also go to the card for a chargeback. Most cards allow 90 days for this, but some will go as far as 120 days.