PayPal Friends & Family listings. Why is this becoming so common?

I don't take seriously any seller who insists on F&F.

Some sellers don"t trust PayPal's buyer's protection policy where they always (reportedly) side with the buyer regardless of circumstances.  PayPal's "Friends and Family" does not afford the buyer with any protection. 

Many are afraid of the IRS 1099 reporting requirements.

Many buyers and/or sellers don't want to pay the additional cost involved with a regular PayPal transaction.

@cleeds    +1 

I've done about six deals on U.S. Audiomart.  All but one was F&F.  The one that wasn't was a dealer listing.  I would never do F&F unless a seller had excellent feedback or if the dollar amount was small.  A few sellers were willing to do standard PayPal goods and services if I paid the 3% PayPal fee. 

I see the same thing on Gunbroker.  Many sellers add 3% if you pay with a credit card.

As has been mentioned, between the potential IRS involvement and scammers, it is worrisome.

ozzy

My last listing a few weeks ago on Audiomart was F&F at the request of the buyer. Honestly, I didn't see a downside for me (Seller). I'm not a dealer and things I sell are always at a huge loss so I wouldn't get taxed anyway. It's just more paperwork for me on my side when I file my taxes. If I was the buyer this would be a very different situation for me. I would have to really know and trust someone to do that.

I have had some scammers beg me to let them use regular PayPal when buying from me. The seller takes all the risk. If you want hard guarantees, buy from a dealer. I have made numerous purchases using F&F with no problems. Do your homework, ask the right questions and speak to the seller on the phone for significant purchases. 

“It seems like buyers demand around a 20% discount to take on the added risk of F&F. ”

I have not experienced that at all…my last 12 transactions on USAM, all F&F ranging between $16K - $150. I have sold items within 95% of my asking price. If a buyer wants protection, they can fork out 4% PayPal fee. IRS is a non-issue as you seldom make any profit when you reselling an item.

As far Trust goes, it’s a two way street. You need to do your due diligence in every transaction (feedback and pay close attention to how they are communicating), there are lot of good people out there.

BTW, PayPal protection is worthless! I never relied on them to do right by seller or buyer. 

Not my experience either. With fewer folks buying new gear, there is less used gear on the market. The power has shifted from the buyers to the sellers, and the sellers are simply trying to indemnify themselves against fraud.

If F&F makes anyone uncomfortable it's really simple, dont buy from those sellers requesting it. 

The only way to buy on "friends and family" terms is if the seller first sends the goodsout first on approval.

@viridian 

 there is less used gear on the market

my experience is the opposite

I base my statement on US Audiomart, where I moderated the forums, and this may not be representative of the broader market at all, and certainly does not take into account Craigslist and the like, but currently there are 11,000 active listings on USAM, that has ranged to over 24,000 at times. Assuming their data is correct, that is very low and much lower than the pandemic years.

So granted I may be using the wrong metric. What metric are you using?

“If F&F makes anyone uncomfortable it’s really simple, dont buy from those sellers requesting it. ”

I am curious, all those opposing F&F option, would you be willing to pay PayPal fee?

2 reasons plain & simple...
1:Sellers are already having to discount prices beyond absurd just to move their gear & are not willing to throw another 3.5% for PP G&S fees away on top of that...
2:Unscrupulous buyers are using PP's Buyer First protection to scam sellers by causing some minimal damage to products then claiming "Not As Advertised",forcing an even further discount on already rock bottom pricing...I have,in the last year,fought off 2 different POS buyers trying this because I photograph every sold product heavily,as well as final packaging & attach these pics to shipping confirmed emails to buyer before they go out..

I've bought and sold gear here and on AM for 35 years. The above example is always a huge fear. Thankfully its never happened to me. Although anything of great value I'm extremely careful on who i will sell too.

Question for all- I thought the IRS put on hold the demand for PP to disclose any transactions over 599.00,. or the issuing of a 1099. Is still the case ?

Any and all info on this would be greatly appreciated.

I'm not trying to hijack the thread...but feel this is relevant info regarding the OP original question.

Example to the above... If I buy a used amp that sold new for 5000 and I buy it for 2500. I then eventually sell it for 2000. If I get a 1099 for 2000...how would I prove a loss at any of the above example? I wouldn't have an documentation to support my loss based on second hand sales.

I sincerely doubt that you have been buying and selling here for 35 years. Audiogon was not in existence in the 1980s and started in 1996.

+1 @lalitk ​​​​​@freediver 

I try to avoid PayPal altogether. My intention is to use Venmo going forward.

I was in on the ground floor...okay on AGon 28 years. Your a complete ahole if thats what you got out of my question. And buying and selling locally before that.

WTF is wrong with you ?

OZZY- Are there daily limits with Venmo ?

Not sure. My wife has had an account for a while, I just recently opened mine and haven’t used it yet.

@krelldog 

As you know, IRS requires documentation. If you bought an amp for $2500 and sold it for $2K then you shouldn’t pay any tax cause you actually took a loss. I keep records of all transactions upto 5 years. I prepare an excel spreadsheet each year of all of my purchases and resale transactions and keep it handy for IRS. 

Krellpuppy, making false statements, to bolster your dubious credibility, and then doubling down on them, is in keeping with the current climate; you must feel right at home, LOL. That’s what I got out of your little temper tantrum.

I just ignore anyone who insists on F&F.

BTW, PayPal protection is worthless!

Years ago, I purchased two cables for $900 from a buyer with 100% positive feedback. I never received the cables. Since USPS Priority Mail uses geotracking, the local Postmaster confirmed that the package was time-stamped and delivered to my home. It probably was stolen off my front porch.

Paypal Protection requires that purchases with a value over $750 to have shipping insurance. The buyer wanted to save $3.95 and didn’t get the insurance. Paypal issued a full refund to me within 24 hours of my claim.  The seller lost $900.

- - - -

Whenever I sell an item via Paypal F&F, I always include Signature Confirmation Required - as well as shipping insurance. It’s worth $10 to me for peace of mind.

Cash and local pickup only. I’ve had people drive hundreds and over 1000 miles to pickup the item, even when I had the original boxes.
When I have sold items overseas, there is no signature required option after it leaves the states, so I demanded that the money be sent to me and clears before I ship the product.
 I used to sell with F&F thinking it was safer/less hackable but it isn’t.

+1 freediver

lalitk

I am curious, all those opposing F&F option, would you be willing to pay PayPal fee?

Probably, although the preference for F&F would be a red flag for me. But I may not be typical because I don't often buy used equipment.

Due to the amount of internet thievery, I will never purchase any item under the F&F option.  I see F&F and I immediately mistrust the transaction and/or the dealer.

I use F&F with sellers that I have had 1 or 2 successful regular transactions.

As for selling and the 1099 the obvious problem is proving what you paid for the item. New stuff I might have a receipt but who keeps that stuff beyond the normal non-business record keeping requirements? I keep 7 years just in case the IRS tries to claim fraud in my return. No records of what I bought on eBay beyond what eBay allows me to see.

When I buy using F&F I have a phone conversation with the seller, ask for additional pictures to be texted to my cell, check feedback and research the seller including what they do for a living, their LinkedIn profile etc. I also do not sell to buyers with 0 feedback using G&S due to possibility of fraud and chargebacks. And I do not buy from sellers with 0 feedback. I never had a problem. If I do not trust the sellers I either request to use PayPal G&S or don’t buy from them.
 

I have bought and sold a ton on AG and USAM using F&F without issues. 

@lalitk BTW, PayPal protection is worthless! I never relied on them to do right by seller or buyer. 

Maybe this is true sometimes.  I sold an LP on Discogs.com, and the buyer returned a different copy as if it were the one I sold him.  I marshalled all the photographic and messaging evidence I could, and PayPal supported me in the dispute.

“It seems like buyers demand around a 20% discount to take on the added risk of F&F. ”

I have not experienced that at all…my last 12 transactions on USAM, all F&F ranging between $16K - $150. I have sold items within 95% of my asking price. If a buyer wants protection, they can fork out 4% PayPal fee. IRS is a non-issue as you seldom make any profit when you reselling an item.

I should clarify, I see this situation happening when there is NO Paypal Goods & Services option. If you offer a 4% G&S option, that will build trust, and the buyer may decide that saving 4% is worth it. 

One thing I hadn't thought of before: Someone paying via paypal and in a few weeks damaging a product, then claiming item as broken to paypal.

This was reason I was given by a seller when I paid via PP (not F&F) and seller refunded my money as to avoid potential scam.

I've purchased several items with f&f with no issues.

I've now started asking buyers to use PayPal F&F or bank check, or even personal check (ships when cleared), not just because of the PayPal fees, but also because the new rules compel PayPal to generate a 1099 form, which complicates things enormously where I live. If it were only my federal/state  tax return I had to worry about, it wouldn't be that big an issue because I can document the purchase price if the item compared to the price it sold for (usually half or less of retail). But in my city, they now require us to get a business license and pay tax on the GROSS income amount for any 1099 amount in excess of $600, calling this a home-based business. That's kind of the final straw for me. 

What o you get for those home base taxes? 

@jafant

The bigger issue in all of this, is that, the scumbag (D) party. made the IRS and Tax changes.

Some people prefer to curse and complain - while having absolutely no idea what they’re talking about.

- - - -

South Dakota vs Wayfair - U.S. Supreme Court ruling on the national online sales tax.

5:4 decision. 4 conservative justices + 1 liberal justice voted for the online sales tax.       3 liberal justices + 1 conservative justice voted against the online sales tax.

- - - -

- Request for a national online sales tax filed by a Republican state, South Dakota.

- Argued in front of the U.S. Supreme Court during Trump’s administration in 2018.

- Here’s Trump’s tweet in favor of the national sales tax ruling.

Big Supreme Court win on internet sales tax - about time! Big victory for fairness and for our country. Great victory for consumers and retailers.

Another thing to consider: Venmo is secure in the sense that buyers cannot stop or reverse payments, so once it's in your Venmo it's good as cash.

Except when it's not. There's a loophole that goes like this: if - and only if - the Venmo transaction was backed by a credit card and the cardholder disputes the charge with his card's issuer, that dispute takes precedence over Venmo's own T&Cs, and Venmo will reverse the payment (could be one or two months after the fact) and take the money out of your account while the dispute is being investigated. Then the card issuer may or may not find in your favor, and if they don't then you're out the money.

It can happen with Paypal too, because (a) this loophole is based on federal regulation so it applies to all payment providers, and (b) PayPal itself mentions it, however opaquely, in the T&Cs of its buyer protection program.

tt does not matter whether the disputed transaction took place under Goods and Services or Friends and Family.

It would not necessarily be fraud, it could just be a dispute over the goods sold. But the process is kind of onerous, so if you've sold something for $200 you're most likely safe.

What I know is based on experience that's two years old. Rules may or may not have changed since.

I used to use PP G/S when selling and I would gladly pay the fee. The 1099 crap makes it challenging to use it- but I understand the buyer's dilemma.

I've been burned, once paying with F&F. So now I offer to pay the fee, I add 3.5% to the total, and go with Goods and Services if the seller agrees. Selling used items seldom makes a profit, so no income... What I don't understand is how sales tax can be added to a transaction between two individuals. Anyone who can explain?

steakster +1

@puptent I think it is because it is a transaction, money changes hands, and the government has the opportunity to tax you. Think about it, sales tax (sales transaction), income tax (payroll transaction), interest (dividend transaction), 401k (distribution transaction), inheritance (probate transaction). If money is changing hands, the government wants a cut of the action, we call it taxes. 
Note: Those rich enough to have unrealized capital gains, that is to say, there has not yet been a sales transaction from which they have profited, can borrow against their unrealized gain at ridiculously low interest rates (like 1%), and avoid paying any tax because there has been no ‘transaction’ in the classic sense of money changing hands, it has only been ‘cleaned’ by the bank. 
At least those are my thoughts on the issue, someone more informed on matters of high-finance may choose to enlighten us further and/or refute my claims. 

r > g

If we could find someway to end/reverse that, things would improve.

By the way, I like your 'cleaned' as another way of saying 'laundered'. Very tongue in cheek. 

All the best,
Nonoise

I have zero problems selling with F & F.

The key is asking for a phone conversation. 
Worst case would be angry calls if item did not go out.

Nobody wants that.

People are generally civil.p