This is the person responsible for most urban legends. The guy who is usually the subject of these urban legends is the very same person referred to in a friend of a friend knew this guy.

The friend of a friend is usually an excuse when someone catches you rehashing some urban legend. For example:

"This guy woke up in a bathtub full of ice, with a sign saying that if we got up, he would die."
"Bullshit, that's just some stupid urban legend."
"Well, a friend of a friend told me that. And he said that he knew this guy who it happened to."

Infinitely more plausable than "some guy I know's cousin", who had the same thing happen to him. Although maybe your friend's friend and the guy I know's cousin are the same guy. We should hang out together sometime, the five of us, and talk about old times, like that time he was at the gas station, and the attendant noticed a dark figure curled up on the floor in the back seat...

My friend used to tell a story about this friend he knew who had a testicle skewered by a tomato spear. Naturally, we gave him shit because it sounded so much like one of those "Uh, not me, but I guy I know..." lines. Thank God he didn't whip it out to prove himself.