PayPal offers two payment types: Personal Payments for exchanges with friends and family, and Purchases for Goods and Services for buying items. Fees apply. Typically, PayPal does not issue 1099 for friends and family transactions because these payments are not usually considered taxable. However, if the payments are frequent or business-related, PayPal might issue 1099-K for them.
Friends/family (or gift payments) are intended as a transfer of funds from family or friends to one another. There is no processing fee when payment is made with bank or PayPal. You won’t be charged a PayPal fee for receiving friends and family payments. Just click the transaction to see if there’s a fee or not.
In the United States (or within the U. K.), personal payments between friends and family are free via PayPal, as long as you pay directly from your PayPal balance or bank account. PayPal also offers a ‘Goods and Services’ payment option for purchasing goods and services from sellers you may not know. Eligible Goods and Services payments can receive PayPal Buyer. However, if you can’t change to the Friends and Family option, it’s likely because you can only send Friends and Family payments to personal accounts.
Since July 28th, 2022, you can only receive funds with a personal PayPal account via Friends and Family⁵. To receive a business payment, you need to use PayPal’s Goods and Services (G and S) feature. PayPal Friends and Family (F and F) offers a convenient and secure way to send money to friends and family without incurring any fees.
In the UK, friends/family payments are free within the UK but only if funded via a bank account or funds in your balance. If you use a credit card, you pay a fee. PayPal does protect against “Goods and Services” scams but does not reimburse “payments sent using PayPal’s Friends and Family functionality”.
In conclusion, PayPal offers two payment types: Personal Payments for exchanges with friends and family, and Purchases for Goods and Services for buying items. However, it is important to note that asking buyers to pay PayPal fees or use friends and family is against PayPal’s terms and conditions.
| Article | Description | Site |
|---|---|---|
| (HELP) Why do so many sellers request “friends and family” … | PayPal has two payment options: “Friends and Family” for payments that you send to people you personally know, and “Goods and Services” for payments to people … | reddit.com |
| How to use PayPal Friends and Family—and how not … | While PayPal does protect against “Goods and Services” scams, Paypal does not reimburse “payments sent using PayPal’s friends and family functionality. | zipbooks.com |
| Friends and family payment | Friends/family payments are free within the UK but only if funded via a bank account or funds in your balance, if you use a credit card then you pay a fee … | paypal-community.com |
📹 PayPal Scams – Friends and Family – Fortnite Account Example
This PayPal Scam has come up a lot lately, most recently where a person was trying to buy a Fortnite account using PayPal. In this …
Does PayPal Hold Funds For Friends And Family Payments?
If your PayPal money is on hold, it could stem from various reasons. Unusual account activity can trigger a hold, particularly when receiving a payment from a friend or family member for the first time or after a significant gap; PayPal may hold these funds for up to 21 days. For example, if a large sum was sent for a security deposit via the Friends and Family option, it might be held indefinitely, as reported by a user.
Sometimes, holds occur if the sender mistakenly chooses "For goods and services" instead of "For friends and family." A payment may also be held temporarily during the authorization process due to security checks, particularly if account activity is sporadic.
Additionally, payments might be reviewed for other risks or tax-related issues, with some held for up to 21 days. Funds can be released sooner if specific conditions are met, such as confirming order statuses. Regardless, using the Friends and Family option typically incurs no fees if funded from a PayPal balance or linked bank account. PayPal has security measures that may lead to temporary holds without user initiation if unusual activity is detected. Users are advised to keep their accounts active and updated to mitigate potential holds. In the end, holds can be resolved relatively quickly, usually up to a few days, depending on circumstances.
Can You Dispute A PayPal Payment To Friends And Family?
To request a refund from a PayPal transaction, first reach out to the recipient using their contact details or the Chat option within the transaction. If you do not receive a response and your payment was sent as ‘Goods and Services,’ you can file a dispute within the designated timeframe. Disputing a ‘Friends and Family’ payment is only possible in specific instances, such as if your account was hacked and the payment was unauthorized. In such cases, log into your PayPal account, go to the Activity section, and select the ‘Dispute’ button.
Otherwise, refunds for ‘Friends and Family’ payments are not typically possible, as these transactions lack Buyer Protection. When purchasing goods or services, it is crucial to avoid sending ‘Friends and Family’ payments to prevent vulnerability to scams, as these transfers do not offer any recourse for buyers. PayPal strongly advises against marking goods and services as ‘Friends and Family’ and emphasizes the importance of using the appropriate payment option for transactions.
During the dispute process, direct communication between the customer and the seller is essential for resolution. Remember that if a seller insists on using the ‘Friends and Family’ option, it may indicate fraudulent behavior. For further assistance, access the PayPal Resolution Center to handle any issues, report problems, or explore options for fighting chargebacks. Always prioritize secure payment methods to safeguard your transactions.
Are PayPal Friends And Family Payments Protected?
PayPal offers two payment types: "Goods and Services," which includes Buyer Protection, and "Friends and Family," which does not. Payments made through the Friends and Family option are not protected by PayPal's Buyer Protection and are intended only for personal transactions between known individuals, such as lending money to a friend or sending a gift to family. Using Friends and Family for transactions with unknown sellers can lead to scams, as these payments don’t offer the same protection as Goods and Services payments. If a seller asks you to use the Friends and Family option when purchasing goods or services, it’s advisable to refuse, as this could indicate a scam.
While Friends and Family payments have no processing fees when sent directly from a PayPal balance or bank account, they lack Buyer Protection—meaning if problems arise, you may not be able to recover your money. Personal payments are suitable for exchanging money among friends and family but aren’t covered by any form of purchase protection.
In summary, always choose the Goods and Services option when buying from unknown vendors to ensure you're protected against fraud. Be cautious of any seller encouraging the use of Friends and Family for transactions beyond personal exchanges. If you're engaging in commercial activities, opt for the payment type designed for purchases to benefit from PayPal’s security features.
Are Friends And Family Payments Free?
Friends and Family payments via PayPal allow you to send money to anyone in the U. S. for free using your bank account or PayPal balance. However, if you're sending money internationally, a transaction fee of up to 5% of the sent amount (capped at $4. 99 USD) may apply. Payments made with a debit or credit card incur small charges. For personal payments within the U. S. or the U. K., it's free if funded through your PayPal balance or bank account. However, sending money internationally carries fees ranging from a minimum of $0. 99 to a maximum of $4. 99.
As of July 28, 2022, U. S. business accounts can no longer receive Friends and Family payments from U. S. senders to maintain eligibility and compliance. Payments are encrypted for security, although they're not covered by PayPal Buyer Protection. Understanding the differences between Friends and Family and Goods and Services payments is crucial, as the latter incurs fees while the former can be free in domestic situations.
Despite being free, using the Friends and Family option for business transactions poses significant risks. You can send money for various purposes, such as gifts or settling shared expenses, but keep in mind the potential charges based on the payment method and whether the transaction is domestic or international.
Can The IRS See My PayPal Account?
If you meet the IRS threshold for a calendar year, PayPal will issue you a Form 1099-K in January of the subsequent year and file it with the IRS by the due date. You can view your 1099-K starting January 31 and your Crypto gains/loss statement from February 15 by accessing the PayPal Statements and Tax Center. If you collect payments for a side gig through platforms like PayPal, you need to report any payments received above the threshold. If issues arise when trying to access your account, you can follow specific steps or request a faxed IRS Letter 147C for swift resolution.
The IRS requires third-party payment platforms, including PayPal, to report certain transactions over specified thresholds. It's essential to report income received through such platforms, including rules and forms applicable. Recent IRS announcements indicate a forthcoming change in reporting requirements for payment apps to monitor otherwise unreported transactions. PayPal, along with other payment processors, must report user payments for goods and services.
Although the government generally cannot view your PayPal transactions, they can levy your account for unpaid taxes just as they would a bank account. Family and friend transactions via PayPal are not subjected to IRS reporting, but you still should report any income yourself. Access to tax forms occurs through the PayPal Statements and Tax Center.
Why Is Money Pending On PayPal Friends And Family?
When a payment you sent via PayPal is marked as pending or unclaimed, it indicates that the recipient has neither accepted nor received the payment yet. This status commonly occurs if the payment is directed to an email address or phone number without a verified PayPal account. For instance, if your payment to Friends and Family has been pending for several days, it might be due to various reasons, including processing issues, eChecks, or whether the payment was sent as goods and services instead.
Typically, funds can leave your bank account within hours to days, but may take longer to be processed and cleared through PayPal, often going through an Automated Clearing House (ACH). It's essential not to ship any items when payments are pending.
You can check your payment’s status and estimated clearing date by visiting your PayPal Activity page. If recent transactions appear pending, it could be due to factors like seller account limitations, disputes, or even technical difficulties. If the payment appears as unclaimed or is awaiting action from the recipient, actions should be taken to resolve the matter to ensure completion. Common causes for holds include unusual transactions or using PayPal for goods and services instead of friends and family transactions.
How Do I Get My Friends And Family Money Back On PayPal?
PayPal has ceased providing refunds for Friends and Family payments, as these transactions lack coverage under PayPal's Purchase Protection Program. Users can cancel pending payments or seek reimbursement from the recipient. For those who used the Goods/Services option, disputes can be initiated via the PayPal Resolution Center. Friends and Family payments are intended as gifts, which is why they come with no processing fees when funded through bank accounts.
If a refund is sought after mistakenly sending money via Friends and Family, contacting credit card services may help, but the refund generally returns to the original payment method. Personal payments between friends and family in the U. S. or U. K. are free when funded directly from the PayPal balance or bank. To request a refund on a PayPal payment, users can select the payment within their Activity, issue a refund, and follow the prompts.
Disputing Friends and Family payments can be challenging and often yields no results. Finally, if a payment's status is completed, users should directly request a refund from the recipient, as recourse for errors in these transactions is limited.
Does PayPal Track Friends And Family Payments?
If you're using PayPal's "friends and family" option for personal transactions, these payments generally aren't reported to the IRS through a 1099 form, as they're typically not seen as taxable income. However, if transactions are frequent or business-related and exceed IRS thresholds, PayPal might issue a report. PayPal has two main payment types: "Personal Payments" for transactions between friends and family and "Purchases for Goods and Services" for commercial exchanges, which incur fees.
As of July 28, 2022, US business accounts cannot receive friends and family payments, ensuring tax compliance. Payments sent as "friends and family" are free if using PayPal balance or bank account. Users can send or request money, designating it as either "friends and family" or "goods and services," affecting tax reporting and fee structures. For users earning over $5, 000 through various payment platforms, a 1099-K is issued as a summary instead of multiple forms.
It's essential to keep track of payments and remember that PayPal does not reimburse transactions made using the friends and family option. This service is intended strictly for known contacts, avoiding commercial transactions to ensure safety and compliance.
Do You Have To Pay Taxes On PayPal Friends And Family?
Tax laws apply only to payments received for goods and services, not to those made through the Friends and Family option on payment platforms like PayPal, Venmo, or Cash App. A PayPal 1099-K form is issued to business account holders by the IRS to report income from third-party payment services. Individuals earning over $5, 000 from multiple clients through PayPal or similar platforms will receive one 1099-K form rather than multiple. Starting January 1, 2024, the IRS altered reporting rules, meaning you'll need to report earned income over $600, a significant reduction from the previous $5, 000 threshold.
Transactions labeled as Friends and Family are excluded from taxable events, while those for goods and services are not. PayPal also does not report personal payments but may issue a 1099-K for taxable transactions. If payments are classified as loans or gifts, they are not taxable, and users should consult tax professionals for clarity. While PayPal does not report Friends and Family transactions to the IRS, individuals must ensure they report any applicable earnings on their tax returns. Lastly, PayPal’s safety features protect users during transactions, but transaction fees apply for certain services.
📹 How to Send Money Through Friends and Family on PayPal
Thank you for watching this tutorial video. If you found this tutorial helpful consider leaving a like and subscribing and comment …
I’m GLAD to find this. We were just about to purchase a set of puppies from a saler. First he wanted us to use some money application on our phone. I suggested we use PayPal since we have an account. He said no problem but that we needed to use the Friends and Family option ONLY. We asked for an invoice and suggested using the PayPal INvoice option but he kept insisting on using the Friends and Family option. We explained that neither of us would be protected using that method. I never received a response back. If it sounds wrong, it’s wrong.
Sellers don’t have protection against buyers, should make a article on the opposite scams where buyers claim ineffective product or non delivered and you have to cough up all the money back while your item never returns. Plus the police don’t do anything except refer you to fraud and you get a fraud report number but without a police report paypal don’t protect the seller. Good stuff
Thank you for your guidance. I have a foreign seller on eBay who told me to choose the “Family & Friends” section for payment, and I replied back by telling him I won’t be getting any protection. As we (seller & buyer) come from two different countries but both are in the European Union, if I (and I will) choose the “Goods & Services” option, do I have to pay an extra fee for protection? – Vince
So the general census is that the buyer should always use Goods and Services. However, what should the seller do when they’re selling digital content in a game? The buyer can use Goods and Services, receive the digital content and ask for a refund. The seller would have no proof that the buyer received the digital item, so the seller would lose the payment and their item as I do not think they’re covered by seller protection.
some sellers will only take FF because of past abuses from PayPal ! It’s not only the outrageous fees one pays via ebay + paypal, it’s the fact that when a dispute is open paypal will take your money and later decide in favour of the buyer regardless of proof provided, this HAS been the case for me 100% of the time! Also, paypal can hold your money for NO REASON, i’ve had my account frozen at least 3 times and wants all my documentation, which by the way is a severe privacy law infringement in Europe where i live. PayPal is the absolute worst, i wouldn’t recommend it even to receive FF payments, these too get PENDING for NO REASON
I am using Instagram influencers for business I contacted to one and they gave me their paypal and I made the deal I contacted another one and they gave me the same PayPal, I thought they were managed by one person but they were not The second one i reached out to wanted me to sent it through PayPal “Friends and Family” Do you think I should do it or not? Should I send them as goods and services or should I just forget about the second influencer?
@Angell EYE Most of the stuff you say in your article is true but not all of it, and you are giving sellers a false sense of security. Sellers are not protected by friends and family payments either. All you have to do is google if you can charge back a friends and family payment and you will know. Also PayPal don’t ban sellers for selling via Friends and Family. I am a digital goods seller and have been for over 5 years. There is a lot of other legit sellers out there that have been selling for years and they haven’t been banned either. PayPal only cared about sending Friends and Family about 3 years ago when there was no fees for Friends and Family international payments. Now there is, so now they get their money and they don’t care anymore. Buyers are still protected as long as they don’t send with PayPal Balance/Wallet. Your Bank or your Credit Card company will get your money back. Now this is bad for legit sellers that sell to buyers and they charge back and scam the seller. Trust me there is a lot of buyers that scam as well. So all you legit Sellers out there be careful and know the risks on you as well.
So I got scammed two days ago….. by giving money to the person through friends and family….. it was only after that I found out he was a scammer….. I filed a dispute yesterday explaining that the scammer took my money and refuses to refund me…. and that I want my money back…. I wish I came here first because now I’m scared that I won’t get my refund…. I’m hoping that my dispute goes my way….😔
I just did this for 240$ for snkrs and the guy needed friends and family because he’s using his friends PayPal and he lives in the US and I’m from Canada, and he still talks to me and keeps me updated he hasn’t blocked me on social media and he sounds trust worthy… did I get scammed ?😭😭 HE SAID HE NEEDED IT BECAUSE ITS INSTANT AND NO REQUIRED FEES
So I’m willing to sell my account on Paypal and I will send him the info via email If I provide a screenshot of me giving the buyer the info and I proved that the email I send the info to belongs to the buyer Will that be enough to protect me from a charge back case ? And if not what can I do to protect myself as a legit account seller from being charged back for no good reason ? Very very helpful vid btw 🙏
I currently have this problem, someone bought an account from me and they sent it using F&F and the sender is trying to dispute it with unauthorized transaction. We also have conversation that the sender received the account can I use this conversation as a proof that the sender received the account?
I dunno if you work for them but see if you can figure this out. I sold an item on eBay for $220 with eBay tax came to be $245 right!? And being that I couldn’t ship it out so I cancelled and refund this person. But I guess PayPal put the refund on hold (dunno the reason) but a few days later after chatting back and forth with PayPal, they replied back “we assured you we already refunded $180 back to the buyer”! My respond was where in the hell (but in professional term) where did you get the 180 number from, it suppose to be $245!? And I asked them for the refund ID#, They never answer any of my questions! Like the 1-2 days later I noticed the money gone missing from my PayPal account! This happened on the 8th of Dec. Til now the case is still open! Just a couple of days they responded back that “the buyer wants his money back”! I told them I didn’t even touched his money so everything should be there! Well thank God for 2019 that everything has been documented! So I’m not worried!
I actually selected for my payment to be processed and “Goods and Services” for this very reason but it processed as Friends and Family in error. I should not be held accountable for a PayPal processing error – I was charged more for using this option as well (an extra unnecessary PayPal transaction fee.) I would be fine with no payment protection if I intentionally sent it using Friends and Family but I intended to use Goods and Services, selected it and the extra charge was not shown in the payment summary. This Friends and Family option should not exist for reasons like I experienced. Even people aware of this can have PayPal’s payment processing system send the payment the wrong way due to a glitch. This is completely fucked up and I almost feel like taking this to court
I got scammed 120$ because the person said they didn’t want me to charge back and take their fortnite account and he was really untrustworthy from the begging but has 200 good reviews then I figured he gave the account after they reviewed he logged them out and kept on repeating earning money every time
I sent the seller money on goods and services and they never gave me any account information until the money was off the hold by PayPal. I was a little concerned so I requested a refund on the account which he never granted, nor did he give me the account and only responded, “f*** off” to my request for a refund . I just filed a dispute on him today. Do you think I’ll win?
Hey man, even though this article was a while back but I’m glad I did encounter this today in the late year of 2022😃I just have some concerns and hope you can help me with this because I did pay someone for online intangible services, I want them to retrieve my lost account and pay them thru PayPal with Goods & Services Option (not thru Friends & Family as they wanted) but can I still request from PayPal for a refund back even the seller (or the one on the other end) don’t wanna refund my money back??? Thank you and hope you can give me an answer either way, just for my peace of mind so that I know what to do next time because I feel like I got scammed!😟
I sent friends and family and had to pay 14.97 rippoffs never said how they was sending it. So my son can’t get the 500 dollars. And I can’t get it back. I thought since he was in my PayPal contacts that he had PayPal. Well he don’t. And I had no phone number in there for him only an old email. I think they sent that 500 to my sons old email and they refuse to refund me the 500 dollars. And it cost me 14.97.. never ever use PayPal 3 weeks later and PayPal keeps refusing to help. I reported them to my bank and to BBB
i got scamed for willow smith concert tickets the seller neveer sent me them and yes i asked for confirmation and everything.. called my bank and they said they cant do nothigbecause i used my checking ? i didnt know i used checking either but they told me to`file a police report but… will police even do anything and will i even get my $50 ? i want to know before i do anything with the police involved
Yeah i bought some items in a game from someone (a youtuber) i was pretty stupid to do it since it was pretty fishy. But i sent him the money via friends and family without thinking about it and he just ghosted me, it’s been over 2 hours since i paid him and he hasnt messaged me back since i paid him.
Trying to sell my PS4 Pro 2TB. I keep getting messages from people wanting me to ship it even though i posted as local pickup only lol. So i told them ill ship it but it must be through paypal friends & family so i know that they cant reverse payments. Not a single person has replied back lol they insisted on email etransfer not using Paypal.
Hi, very helpful.Thank you for sharing.(Liked &share). Is it safe to send PayPal-me or Email, linked to PayPal for requesting or sending money? for example, someone don’ st sells anything online but needs to send or receive money by PayPal, can anyone tell what is the safe way to do that? Avoid being charged back or any claim except PayPal fee? If friends & family can be charged back, then what are the point and difference? I don’t know why PayPal itself doesn’t make helpful cristal clear article like this? it’s for not easy for everyone to read and understand all policies! He put at least 10 minutes of his time ( of course is a lot more )and effort to explain to us, why they can’t do that?
This is false I sold a couple of items to someone that told me they wanted to send me money with friends and family so both of us won’t have a tap any fees. So I thought to myself why does this person want to pay friends and family? There is no buyer protection. So I said ok why not, no fees. So I sold him some items and he paid friends and family. Now everything went good and I got the money and end of story right ? Wrong! He filed a charge back with his bank and PayPal with unauthorized usage and guess what happened he got his money back even tho friends and family was selected! So now I’m out my items and over 1000 dollars negative in my PayPal account. So friends and family is 100 percent refundable! Wish I sold with goods and services smh -_-