How to Report Fake PayPal Phish Emails

First of all, you need to forward fake PayPal emails to spoof@paypal.com with the full headers included.  Depending on what email client or web email service you use, you'll have to search to find out where to get it to show the full headers for the email, because that's what's needed to trace the email back to the sender.  An email address itself is useless, because it's almost always bogus.  Second, you can sign up for SpamCop and paste in the full email (again with headers included) and it will report it to their ISP automatically. https://www.spamcop.net/anonsignup.shtml

You can also report the bogus PayPal URL to PhishTank where it will get sent on to third parties like Google and places that will block it in peoples browsers so they can't access it http://www.phishtank.com/

Finally, here's a good link explaining how phishing scams like this work http://www.rickconner.net/spamweb/spam_phishing.html and an FAQ explaining how spammers do their tricks and how they got ahold of your email in the first place http://www.rickconner.net/spamweb/spamfaq.html