Marketplace Scams via PayPal Friends and Family
Fraudulent marketplace sellers pressure buyers into using PayPal Friends and Family — which carries no buyer protection — instead of Goods and Services, leaving victims unable to dispute non-delivery or counterfeit items.
Last reviewed: 1 June 2026
PayPal's Goods and Services payment method includes buyer protection, allowing disputes for items not received or not as described. PayPal's Friends and Family option does not include this protection — it is designed for personal transfers between people who trust each other. Marketplace scammers exploit this distinction by insisting buyers pay via Friends and Family, often framing it as a favour to avoid fees.
Once a buyer pays via Friends and Family, they have no recourse through PayPal if the item never arrives or is counterfeit. The scammer knows this and has effectively neutralised the platform's safety net.
How this scam works on PayPal
A seller on Facebook Marketplace, Gumtree, or an online forum asks the buyer to pay via PayPal Friends and Family, claiming it avoids PayPal fees or speeds up processing. The buyer, unaware of the distinction, complies. The seller then fails to dispatch the item, sends a completely different product, or dispatches a worthless imitation.
When the buyer contacts PayPal, they are informed that Friends and Family payments are not covered by the buyer protection programme, and the dispute is closed without refund. The seller, aware of this outcome, may offer a partial refund only if the victim agrees to close any complaints.
Some sophisticated operators use fake tracking numbers that show a package in transit indefinitely, buying time before the victim realises the package will never arrive.
Common red flags
- Seller insists on PayPal Friends and Family payment to save fees
- Seller refuses to accept PayPal Goods and Services or any buyer-protected payment method
- Listing price is significantly below market for a sought-after item
- Seller pushes for quick payment before listing ends or another buyer appears
- Seller communication moves off the marketplace to WhatsApp or email
- No meeting in person is offered for higher-value items like electronics or bicycles
How to protect yourself
- Always pay via PayPal Goods and Services for any marketplace purchase from a stranger
- Never agree to Friends and Family payment unless sending money to someone you know and trust personally
- Understand that F&F payments have zero buyer protection — they are equivalent to cash
- If a seller insists on F&F, treat this as a significant red flag and decline the transaction
- Use a credit card funded through PayPal Goods and Services for an additional chargeback layer
- Save all communication records in case a dispute with the seller's bank becomes necessary
How to report it
- Report the seller to the marketplace platform where you found the listing
- File a dispute through PayPal's Resolution Centre — note that F&F payments cannot be formally disputed
- Report to the FTC at ReportFraud.ftc.gov or Action Fraud at actionfraud.police.uk
Frequently asked questions
Why does PayPal allow Friends and Family if it is so easily abused?
Friends and Family is a legitimate feature for sending money to people you know personally — splitting a restaurant bill or gifting money to a family member. The abuse arises when sellers pressure buyers to use it for commercial transactions. PayPal's Terms of Service prohibit sellers from requiring F&F payment for commercial sales, but enforcement depends on reports.