In essence, hackers managed to access an E-Bay customer database and gain access to the personal information of millions of E-Bay customers, including usernames and passwords. E-Bay claims the passwords are encrypted, however, E-Bay customers should change their passwords nevertheless. PayPal accounts were not directly affected since they are part of a different database, but since a lot of users utilize the same password across multiple websites, PayPal passwords should be changed as well just as a precaution.
Additionally, information such as customer shipping addresses was not encrypted, so that information could be used by the hackers to perpetrate other scams, or the information could be sold to third parties for other nefarious schemes. Act accordingly.