"Friends and family" payment is basically a gift. PayPal would not help with a refund if a buyer requests one. If the buyer paid with a credit or debit card, via PayPal, the credit or debit card company may be able to help.
That's a really sketchy way to offer a discount. A couple times, sellers asked me to send payment that way, so the seller avoided the fees, and I just added the cost of the fee to their total and sent it with the "goods and services" payment. Out of principle, I probably wouldn't do that again, as I don't agree with charging someone more so the seller can avoid the fee that PayPal, etc. charge for the service that they provide.
Some sellers want to get every penny they can from a deal, while others are complete scammers, as they know it's much less likely they'll be held accountable if/when the buyer wants a refund.
The crazy thing, based on my experience, is that PayPal will not help with a refund for shoddy restoration work. I learned that when Jaime Mendez Restorations mangled my poster a couple years ago. They basically said "we can't help you with a refund, because JMR performed the service, and the contract stated you paid them for that service." Despite my before/after photos, and me explaining the situation, PayPal was no help. On another note, I think restoration companies should take their own before/after photos. A few "work in progress" photos would also be nice, but it's easy to see why some companies wouldn't do that, as it would be evidence against them for damages they created with their work.