This is unclear. There is no specific penalty for the taxpayer/employee for mis-using FSA funds. (Although the plan holder is required to certify that expenses qualify, I am not aware of a specific penalty for the employee who certifies an expense incorrectly.) However, the FSA plan is supposed to verify charges are allowable, and the plan or the employer can be penalized for failing to follow the rules. I would contact the plan administrator and see what they say.