freelancers requesting the first milestone (1 milestone of 5) as a deposit to start job

[#1]

I have several (10+) freelancers requesting the first milestone (1 milestone of 5) as a deposit to start the entire build. Meaning, they request 20% of funds released before they even start the work. Presented milestones:

Payment Plans:

MS 1. 20% upfront payment

MS 2. 20% after design is implemented into mobile app & website

MS 3. 30% after functionality is half way done

MS 4. 20% after application released for NAT

MS 5. 10% after applications are published on apple/goggle/web server

My question:

1. Is this allowed by outwork to do this?

2. If this is done (whether allowed or not), what recourse does a Client have if the freelancer takes the "MS 1. 20% upfront payment" and no work is done and disappears? refund, dispute?

3. what protections does outwork have for this type business practice? Note, I have been presented with this by 10+ freelancers in the same job.

Thank you.

[#2]

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@Mr. H wrote:

I have several (10+) freelancers requesting the first milestone (1 milestone of 5) as a deposit to start the entire build. Meaning, they request 20% of funds released before they even start the work. Presented milestones:

Payment Plans:

MS 1. 20% upfront payment

MS 2. 20% after design is implemented into mobile app & website

MS 3. 30% after functionality is half way done

MS 4. 20% after application released for NAT

MS 5. 10% after applications are published on apple/goggle/web server

My question:

1. Is this allowed by outwork to do this?

Upwork allows this.

2. If this is done (whether allowed or not), what recourse does a Client have if the freelancer takes the "MS 1. 20% upfront payment" and no work is done and disappears? refund, dispute?

None whatsoever. Paying any amount in escrow means you are approving that milestone and are happy with the result. You won't get your money back, even if you try to dispute, because the milestone is for 0 work and the freelancer did 0 work.

3. what protections does outwork have for this type business practice? Note, I have been presented with this by 10+ freelancers in the same job.

The escrow system is the protection. The funds are in escrow to guarantee that the freelancer will get paid for the work they do.

Thank you.

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 It sounds like your project is very large, so some type of upfront payment wouldn't be completely unreasonable (although in general I'm against them on Upwork). But it also seems extremely unusual that you would get 10+ freelancers proposing identical terms. Are you sure they're not associated in some way? All from the same agency or something?

You have a couple of options at this point:

1) If one of these freelancers with these proposed milestones seems really good, has an extensive work history and excellent Job Success Score, and you really want to work with them, you could either just agree to their suggestion or try to negotiate a smaller up-front payment (e.g. 5%).

2) You could refuse any contract which involves an  up-front payment and only work with a freelancer who is happy to work on YOUR terms. There's plenty of freelancers on Upwork. I'm sure you'd be able to find one.

When you say 10+ freelancers proposed this, was there any indication in your job post that you would do milestones in this way? Did you have any kind of list of suggested milestones in the job post? Are they all proposing identical (or nearly identical) milestones/structures? That would be extremely suspicious to me.

[#3]

Well Mr. H you do those things in real life don't you?  Upwork is a wild frontier.  Most of the time the buyers - sellar's are decent.  But once in a while scammers crawl in.  In a fixed price contract the freelancers basically have zero protection. Fixed price contracts are more riskier to freelancers (but more profitable as well).

But it is not that bad on your part - You have a very big and powerful stick called feedback.  If you feel you are being cheated (yes do end up losing money, but the freelancers risk their ratings and if they really were cheaters Upwork will throw them out).

It is also not uncommon for freelancers to ask for some down payment if you are new with a large and complex project.  For example in Jennifer's case before bidding freelancers can see how much money she has spent, how many people she has hired, her location ......

[#4]

Prashant, while I agree that "in the real world" paying up-front is normal, that's because usually in the real world you're not using an escrow system. The escrow system that Upwork uses is there for the protection of both parties - by putting the money in escrow the client is showing the freelancer they have it, so there's no need for a "good faith" payment to show the client can pony up.

Of course, on Upwork in some industries an up-front payment is quite common. For a new client (which I am assuming the OP is), I wouldn't recommended it though anyway. They'd certainly be able to find a freelancer who would work without it.

It's also possible that this client, because they're new (I assume), is being targeted by a scammer group, which is why they received so many similar proposals. I'd really love some more info on this cluster of similar proposals from the  OP.

[#5]

Jennifer my first few sentences were,"Upwork is a wild frontier.  Most of the time the buyers - sellar's are decent.  But once in a while scammers crawl in."

Everything you say is possible and I have no issues accepting them with some grain of salt though.  It really did not occur to me that being a new buyer he could be a target of a scam.

[#6]

It's always risky when a client gives an upfront payment before work is started. But, there are some things to take into consideration - If there is an EXPECTED timeline (say a month or more) between milestone 1 and milestone 2, then an upfront payment might be considered because it will be a month (or more) before the freelancer can receive payment for the work they are doing. IMO freelancers shouldn't have to work a month without getting some sort of payment.

IF that may be the case in your situation, perhaps you can break down the scope of work in milestone 2 and transfer that to milestone 1. so not only will the freelancer receive money quicker, but it might also let you know that the job/freelancer's are on the right track.  

[#7]

Kathy raises an excellent point.

Especially if you are a new client, but any time you're starting a very large project with a new freelancer, it's always best to do a small test or small milestone to start with - not just to try to weed out scammers but also to make sure you're on the same page and are both happy working together. It would be ideal if you could set up some kind of initial milestone 1 to be just a few hours worth of work - that way, you may be able to avoid the "need" for an up front payment and may save yourself trouble down the line.

[#8]

Jennifer: After your point about new client and scammers I re-read the post.  It sounds like a scam (10+) asking similar thing is a strange coincidence.