Recently bought an item from the classified section, and used PayPal's friends and family so that I would cover the 3% or so fee ($11.03). The next day I looked at my credit card account online, and not only did I have the $381.03 charge from PayPal, but my credit card company added a "Cash Equivalent Transaction fee" of $19.05!
I called my credit card company (BoA) and was told that a fee is charged when you purchase foreign currency, money orders or travelers checks from a nonfinancial institution, or person-to-person money transfers. They also said that PayPal codes F&F charges as person-to-person money transfers, so the added charges are applied.
This may have been mentioned in one of the many terms of use that I have been sent over the years, but I have never seen this charge before.
Trying to save the other person a few dollars, may end up costing you more than you expected. I will never use the F&F feature again.