Quoted from Wolfmarsh:
I don't understand why people continually try to use this to avoid PayPal fees when doing buying transactions.
It goes both ways, though. When I sell a part to someone I don't know, particularly if it's a hard to find part, I'll usually ask them to pay me via "friends and family" and fund it with a bank account or PayPal balance. It has nothing to do with avoiding the PayPal fees. It's the only way to protect yourself from getting fu**ed over. There are a lot of scammers out there who will file a dispute even though they received the item.
Then again, I'm not a business. I'm just a hobbyist who occasionally sells things to other hobbyists. No reputable business should insist on "friends and family".