I grew up house poor, and one of our closest family friends was very wealthy. I never quite got a gift that expensive but it did happen. Frequently got gifts that were $200 or more which is more than we could’ve returned. One year i got a gaming console and a bunch of games. That was my first console at a time my dad was unemployed for over a year.

If it bothered my parents, they never said anything. I do think if i had to return some of those gifts i would’ve been resentful. Not all people give gifts and expect the same monetary value in return. In fact that is part of the point for them because it is a gift that someone wouldn’t have gotten otherwise. I try to do gifts like that too except I’m not rich so i try to guess what something they need but don’t know about. Both can serve the same purpose of getting a gift that they wouldn’t have gotten themselves by removing a barrier (cost in one case, research on the other).

You have already asked the parents, the parents are cool with it, sons friend is cool with it, and your son is cool with it. I think you should be cool with it too. I do think this will make giving gifts to this friend difficult, so you’ll need to have your son lean in that second category. Or if sons friend is self aware about money he won’t be asking for $1k+ gifts from friendsq