Say I make a purchase using dwolla to transfer funds but then never receive the item (or it's defective/broken/etc.). How do I go about getting the funds back and how is the decision made?

With a credit card purchase I would first complain to the seller, but if there's a dispute I can refuse payment for that item when I get the credit card statement. The card issuer must then investigate and make a finding before I have any obligation to pay. So I retain full use of the funds in the interim and in my past experience I have had no problems getting any unjustified charges dropped.