Raw Deal: Fears over scammers taking advantage of Paypal’s ‘friends and family’ option

PayPal users making payments via its “friends and family” option are leaving themselves without payment protection if something goes wrong.

PayPal’s system allows people to select between making a payment for “goods or services” – which comes with buyer protection – or “family and friends” which is a money transfer feature and does not offer protection.

It has emerged some customers are being increasingly encouraged by sellers to make payments using the “friends and family” option – in some cases by online scammers, because it is more difficult for shoppers who have paid via this method to even try to get their money back.

Legitimate traders can also benefit from being paid via “friends and family” because they aren’t charged a fee, unlike with the “goods and services” option.

Making PayPal payments using “friends and family” is appropriate to use if you are paying someone you know and trust.

However, if someone selling you goods or a service asks you to send a payment using this option, you should say no.

If you are buying from an unknown seller or online retailer, only payments made using “goods or services” will be covered by PayPal’s buyer protection scheme.

Under this protection, PayPal will fully reimburse you for the cost of the item and delivery if your order doesn’t arrive or match its description.

PayPal said: “PayPal Buyer Protection does not cover money transfers between friends or family. If someone selling you goods or a service asks you to send a friends and family payment, you should refuse.

“Identifying a payment as being for goods or a service ultimately ensures we can reimburse you if something goes wrong.”