I sell many things using ebay, and I think that what the seller of those phone cases did was, maybe, not as stupid as it seems. I have made a profit on all except one of my items, which I put up at auction starting at $0.99 w/ free shipping. Only one guy bid. The item was small, so shipping using first class mail w/ tracking for an item under 3 ounces was $1.69, which is the price of shipping labels when you buy them through ebay.
Some of you may think that if you sell an item for under a certain amount, it is wise to just not send it out and refund the money. If you do that, however, the buyer of that item can give you negative feedback for not sending the item out, which in turn makes you lose potential customers and therefore money. I think what this seller did was forget to set up shipping costs to foreign destinations, basically advertising his item for $2.99 with free shipping to the entire world instead of just the United States. He made a mistake. When he sold the phone cases to you, he excepted his mistake, took a small loss, and saved himself from possibly getting negative feedback. The seller was not stupid, he was being respectful and honoring his price.
Just for those who do not use ebay, when you buy an item there is a feedback system in which you give the seller of the item positive, neutral, or negative feedback depending on how satisfied you are with your purchase. If someone has negative feedback, it shows that people where unsatisfied with the seller's item, or shipping time, or communication, etc. Most buyers do not purchase items from people with too many negative feedback ratings. If you have negative feedback, you lose business.