1. Foreigners. People in Europe want to buy products off US Amazon but don't want to deal with credit card or banking currency conversion fees or the address verification.
2. Lack of credit cards. Kids or something can use checking-backed PayPal but not credit cards.
3. Leveraging promotions. Microsoft cashback for buyers (10-30% discount on Buy It Now prices) was pretty popular and it completely fucked up eBay economy for awhile so thank god they stopped it. People also often get PayPal or eBay or credit card promotional coupons.
4. People are just stupid. This tends to apply to eBayers.
5. Fencing credit cards. Somewhat rare nowadays.
People also buy physical Staples and OfficeMax because they're percentage-based.
This is actually really shitty business for the seller since eBay/PayPal takes about 25% with their fees.
Then you purchase ITunes gift vouchers for a dollar above value from ebay and apparently save 30% off the equivalent UK prices. The 30% being the figure in the heady days of nearly 2$/£1 - soon I guess we'll be selling the gift cards.
Anyway, I'm sure auction psychology and the Winners Curse still has a lot to do with this.
Now, if I were an US three-letter agency agent, I'd be the top seller of this cards and track the hell out of it. I mean, it even gives a profit, no budget issues. Tracking email, IP, and making contacts would be trivial. Could even be done without a court order to PayPal or anything. Selling gift cards isn't a crime, so it wouldn't be entrapment by itself, AFAIK and IANAL.