Well what should I do then? Message him saying that I will only ship to a confirmed address?
If you want to cover your a** 100 percent, yes. Issue a refund and tell him or her (politely) that you are sorry but you don't ship to unconfirmed addresses. As of now, you are not covered AT ALL under Paypal's seller protection policy. If the buyer disputes the purchase for ANY reason, you will flat out lose the claim.
Being that you have already started the withdrawl process, the only problem is that if you were to issue a refund, your buyer would have to wait a few days for the funds to clear (since you are basically refunding him with an e-check). Now, you could simply send them their money back (instantly) using the "send money" tab but HE (or she) will be charged 3% on the transaction....and you wouldn't get back the 3% that YOU were already charged by Paypal either. If you use the "refund option" though, Paypal gives you back any fees that you were originally charged on the transaction.
I myself have never issued a FULL refund using the "send money" tab because I simply don't know how Paypal would react if the buyer were to still file a claim. I know that you would be able to show them that you issued the buyer a refund (using the send money tab) but you never know 100% what Paypal is going to do. If (for whatever reason) they are stuck with the bill, they WILL look for any way (loophole) to pass it onto you. That's my take on 'em. Of course, if you have the funds in your PAYPAL account to cover the refund, you can disregard everything I just said as the buyer WILL get his money back instantly.
Finally, if the buyer is unable to get his address confirmed with Paypal, you can ask them if they can send you a money order instead. Tell them that if they do so, you can ship the phone to anywhere they'd like. Also, if you think it'll help, you can offer to discount 3% from the total if they send you a money order -what you would've lost to Paypal anyway.
If they are unwilling to accept your offer, make a judgment call. Just because they are new to
eBay doesn't mean that they are out to scam you. If you decide not to go through with the deal, apologize again for not being able to ship to them and move on...though you may get negative feedback from the buyer. Relist the phone and make it clear in your description this time that you will not ship to an unconfirmed address if they Pay via Paypal. Also, while you're at it, log onto your Paypal account and change your settings to block any payments coming from accounts with unconfirmed addresses...if you want to avoid those type of payments, that is....and the changes are never permanent so you can always change 'em back.
I know my response is a little long but I not only wanted to answer your question but possibly provide some addition information that may be helpful to you (or someone else) in the future. Good luck.
-Jose