Maybe. But if the buyer does a chargeback and tells the CC company that they never received the machine, or that you sent a box of rocks or the equivalent, then it's back to you to prove they're wrong, which could be tricky. Especially with CC company and Paypal that aren't too interested in investigating these things. Meanwhile your money is frozen (or PayPal drops your account to negative and takes you to collections, if you've already withdrawn the money). And you might not win in the end anyway. The point is that "Friends and Family" is not risk-free for the seller, and people should be aware of that before they use it.

The PayPal terms of service would bar you from making a claim to retrieve Friends and Family payments through Paypal unless you claim it was an unauthorized transaction (i.e. someone hacked your PayPal account). But that does not stop you from doing a chargeback through your credit card company, which has its own policies on chargebacks that having nothing to do with PayPal's policies, and can be based on failure to deliver in promised condition, etc., and not just on unauthorized charges. And when a credit card chargeback is made against PayPal on your account, PayPal will absolutely take the money back, regardless of the fact that it was a Friends and Family payment.

This problem's been discussed at length on Pinside (check out Vid1900s thread on payment scams for horror stories). Point being, it's not as bulletproof from the seller's perspective as you would think upon reading PayPal's policies.