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

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.