Chargebacks on Upwork

[#1]

So, I am facing my first Chargeback on Upwork for $700. I am having trouble wrapping my head around the concept of delivering work to a client and them approving the three diffrent payments and so I got paid for those jobs and then 2 months later they are able to do a chargeback and then I'm stuck paying Upwork the $700. I didn't even know the client did a chargeback and I tried to withdrawl money from another job I did and I was restricted from withdrawaling funds. My questions is as a Freelancer it's part of business that you get those bad clients however how do you get over losing so much money? It bothers me because like in the real world if someone files a charback you can fight it showing matter of fact you did provide those services. Any encouraging advice would be appreciated. 

[#2 · Accepted solution]

That's terrible. In a "normal" transaction it would be the vendor (you) who has money to lose who would be able to respond to a chargeback claim. I very much question Upwork's business model on this particular point. At the point it becomes a chargeback dispute, they should be acting as a third-party not a primary. But yes, there are other stories on the forums of freelancers being left with no money when a client initiates a chargeback through their credit card company. 

If the client has not paid for the work, you now own it and can resell it. Definitely issue a takedown notice if you spot them using your work online. 

[#3]

This is why I LOL at freelancers claiming Upwork protects them and there is escrow "protection." There is no protection with escrow. It's why I try to always do hourly if I can get it. I will only do small jobs with new clients escrow (< $1000) because of this nonsense.

[#4]

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Jennifer M wrote:

This is why I LOL at freelancers claiming Upwork protects them and there is escrow "protection." There is no protection with escrow. It's why I try to always do hourly if I can get it. I will only do small jobs with new clients escrow (< $1000) because of this nonsense.

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But hourly is attached to someone's credit card too, so how do you know they can't chargeback an hourly billing as well?

[#5]

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Amanda wrote:

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Jennifer M wrote:

This is why I LOL at freelancers claiming Upwork protects them and there is escrow "protection." There is no protection with escrow. It's why I try to always do hourly if I can get it. I will only do small jobs with new clients escrow (< $1000) because of this nonsense.

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But hourly is attached to someone's credit card too, so how do you know they can't chargeback an hourly billing as well?

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You're covered under the protection if your time has been logged according to the terms.

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Heather wrote:

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 It's not that I don't have the money but it's the fact that Upwork is letting clients take advantage of the system.

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Upwork do not "allow" it. When a bank does a chargeback the money is pulled from Upwork's account the second the chargeback hits. Upwork will try and defend it, but if the card has been used fraudulently for example (if the cardholder just found charges they did not authorise) there is not much defense against that.

A chargeback is a violation of the terms of service, the client account will have been suspended (remember that the client and the cardholder may not be the same person...)

Anyway, I am really sorry that happened to you.

[#6]

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Petra R wrote:

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Amanda wrote:

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Jennifer M wrote:

This is why I LOL at freelancers claiming Upwork protects them and there is escrow "protection." There is no protection with escrow. It's why I try to always do hourly if I can get it. I will only do small jobs with new clients escrow (< $1000) because of this nonsense.

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But hourly is attached to someone's credit card too, so how do you know they can't chargeback an hourly billing as well?

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You're covered under the protection if your time has been logged according to the terms.

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Heather wrote:

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 It's not that I don't have the money but it's the fact that Upwork is letting clients take advantage of the system.

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Upwork do not "allow" it. When a bank does a chargeback the money is pulled from Upwork's account the second the chargeback hits. Upwork will try and defend it, but if the card has been used fraudulently for example (if the cardholder just found charges they did not authorise) there is not much defense against that.

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I've seen you say before that Upwork will try to defend against chargebacks, but I can't recall ever having seen anyone else make that claim (no Upwork staff, for instance). And, it seems odd that if Upwork is in fact attempting to defend, not a single one of the many freelancers who have come to the forums upset about chargebacks has mentioned Upwork asking for any information that might be used in fighting a chargeback. 

Do you have actual direct knowledge of Upwork making a meaningful (as opposed to generic responses, which virutally always fail) effort to dispute chargebacks?

[#7]

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Amanda L wrote:

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Jennifer M wrote:

This is why I LOL at freelancers claiming Upwork protects them and there is escrow "protection." There is no protection with escrow. It's why I try to always do hourly if I can get it. I will only do small jobs with new clients escrow (< $1000) because of this nonsense.

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But hourly is attached to someone's credit card too, so how do you know they can't chargeback an hourly billing as well?

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Petra already answered, but I'll reiterate that if you use Tracker and do things properly, you're covered with payment protection. I was paid out once on Elance due to a scammer. Never had to use it on Upwork. I had so many issues with hourly on Elance, but my experience on Upwork has been totally different. I have few problems with hourly and all my disputes have been over escrow. ALMOST got hit with a chargeback too on the last one, which would have been $500 out of my pocket.

I'm extremely picky about taking escrow from new clients and it's usually amounts under $1000. The only thing you get from escrow is that you know there is money on some card, but that's it.

[#8]

I'm so livid right now, so the client decided he was going to get everything for free after seeing how easy it was. SO now I owe upwork $1040,00 and that's even after reversing some funds from me. It's not that I don't have the money but it's the fact that Upwork is letting clients take advantage of the system. imagine I did a charge back for all the connects that i've bought off upwork. I am sure they would be just as thrilled as I am right now. He was a new client and I landed the job as a newbie so I didn't know but this is not okay no matter what candid response anyone gives. 

[#9]

Heather,

I am sorry to see you have had such an early exposure to such an unscrupulous client and Upwork's inability to protect your payments for work performed.

As you have seen, Upwork offers no reliable assurance of payment on fixed-price projects and many projects are not valuable enough to justify a freelancer paying $291 to go that route in a dispute with a client. It would be interesting to know how much money freelancers are forced to return to Upwork due to fraud, but Upwork's lists a Provision for Transaction Losses of $1.2 million in its quarterly report for the three months ended 9/30/19. We don't know whether this cost was primarily due to the type of fraud you have been the victim of, but this cost for the same period last year was $1.9 million, so Upwork is clearly making headway reducing some types of fraud.

I don't know why Upwork offers more payment protection to freelancers for work done under hourly projects, but that extra protection is a good reason to do as many projects as possible as hourly, not fixed-price, projects. I have the choice to only do hourly projects, so that is almost entirely all I use for new clients.

Good luck.

[#10]

Or Upwork's been able to clawback a much higher amount from freelancers this year than they did last year, meaning the net amount of fraud-related losses reported to shareholders has gone down.

There is no way for an outsider to know.

[#11]

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Heather F wrote:

I'm so livid right now, so the client decided he was going to get everything for free after seeing how easy it was. SO now I owe upwork $1040,00 and that's even after reversing some funds from me. It's not that I don't have the money but it's the fact that Upwork is letting clients take advantage of the system. imagine I did a charge back for all the connects that i've bought off upwork. I am sure they would be just as thrilled as I am right now. He was a new client and I landed the job as a newbie so I didn't know but this is not okay no matter what candid response anyone gives. 

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It's not Upwork's fault. That's how online banking and credit cards work. The only thing they could do is disable fixed contracts. Therefore don't do big fixed contracts.

Also, Upwork needs to charge the freelancer for this. Because a client and freelancer could cooperate to milk out Upwork.

Though, they should add some kind of notice. People should know about the chargeback risk before agreeing for a fixed-price contract. 

[#12]

Hi Heather,

I understand your frustration with the issue that occurred with the payment on your contract. I do see our team has been communicating with you since you received the initial notification and notification, as well as sharing all the details about the status of your funds and changes in your account status. I also see our team advised about the available actions and steps as your disposal, and shared related Payment Protection requirements and guidelines. Please refer to your support ticket and continue communicating with our team since we can't discuss chargeback cases in the forums.

[#13]

Can you clarify upwork policy:

- If work is per hour, Upwork pays worker even if there is a chargeback (stolen card).

- If work is project based, Upwork will not compensate worker if there is a chargeback (stolen card).

Is that correct?

[#14]

Upwork's payment assurance for hourly contracts is in place as long as:

1) You track your work time for a project using the TimeTracker app (any manually-added work time on the project is not covered, even if the client "approved" the use of manual time)

2) You work only on the project during each time period tracked

3) You provide "meaningful" notes in the memo section of each tracked period

4) There is no substantial idle time during the work period (meaning you have keyboard and/or mouse activity during each 10-minute sub-period tracked)

5) The client's payment method has already been verified by Upwork (and you have not gotten notice from Upwork to stop working on the project due to problems with the client's previously verified payment method) 

Someone who regularly uses fixed rate projects can tell you how payment assurance works for them.

[#15]

A- To your point #5, as a worker how to know if a payment is verified? "5) The client's payment method has already been verified by Upwork"

B- Can you link the payment assurance terms?

C- All other replies in this thread say there is no assurance to project work and only to hourly work. Are you sure about this?

*I should clarify that by projects I meant *fixed contracts*.

[#16]

Hi Asterisk,

It'll be shown on the job posting whether the client's payment method is verified and a freelancer will be notified when they submit proposals. You can find more information about it here. 

If you'd like to find more information about Upwork Protection for fixed-price and hourly contracts, check out Fixed-Price Escrow Instructions and Hourly, Bonus, and Expense Payment Agreement with Escrow Instructions.

[#17]

Thanks for the reply.

From what you said I understand that if a payment method is NOT verified then either fixed contract term or hourly projects are not protected under payment assurance program.

Is that correct?

Thanks,

[#18]

Yes, you should confirm Upwork has verified the client's payment method before you start work on a project. (Oddly, Upwork will allow work time to be tracked by TimeTracker before the client's payment method is initially confirmed, but if a problem arises with the payment method after the project begins Upwork will not allow TimeTracker to continue to track time.)

But there are other elements that must be in place before payment assurance is available under hourly contracts.

Under fixed price contracts, winning at arbitration is the only way to assure payment of escrowed funds.

[#19]

Thanks.

Can you please detail the "But there are other elements that must be in place before payment assurance is available under hourly contracts."

Is there a solid list for this?

[#20]

Asterisk, why are you so interested in this particular aspect? 

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Asterisk C wrote:

Is there a solid list for this?

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Yes. Here

[#21]

Today is the black day of my freelancing on upwork as today I've been frauded officially by a client with the help of upwork. I was always thinkin it's a safe platform but after today I'll not say it again. A client comes and get all the work done then simply submitt a request of "CHARGBACK" and theft all the money. We put efforts and our time. But for upwork client is client. "Freelancer" you just go to hell. we don't care about your time, efforts. I've been working from last 2 months and hardly make $450 and he got my full dedication and results on his project and also those $450 in the form of "CHARGBACK". This is completely unfair. 1000% unfair. Because client has all the opportunities such as asking for revisions, giving bad ratings, etc. But freelancers doesn't have any single benefit. They just put a "CHARGEBACK" request and say "Hey freelancer Go To Hell".  I just wana say if upwork is charging 20%, 10% or 5% fee from freelancers then they should give them protection. And remove this "CHARGEBACK" method from client area. They are scamming officially with this option

[#22]

Hi, Muhammad T.,

I hate to see any fellow freelancer ripped off by a dishonest client.

But I have learned alot from other freelancers on this message board - would you mind telling us more about this fraud?

Was the contract hourly or fixed price?

Had you worked for the client before without any problems?

Do you feel like you did everything you were supposed to do under Upwork's payment assurance rules?

Did Upwork give you a reason for charging you back for the fees you earned?

Is the client still active on Upwork?

Every freelancer on Upwork has likely made a mistake or two that they won't repeat. I have lost a bit of  money myself due to client mischief, ignorance, laziness or fraud, but it hasn't been serious enough for me to want to leave Upwork in the long run. I hope that is the case for you.

[#23]

Hello Mr Will L,

It was a fixed price offer sent by the client

No, It was my first job with this client

Yes, I've followed all the rules and regulations of upwork's payment protection. My contract is 100% fine. Even he given me 5 star ratings and a write a very good comment that is still available on my profile. He released the payment by himself and ended up the contract with his complete satisfaction. So there's nothing that I can say was going againts the rules and regulations of upwork. 

Upwork  gave me a reason that I think is completely "Non Sense" reason for a freelancer I've attached a file of reason that you can see it.

Yes, he's still active on upwork and I'm sure he'll do this brutality with other freelancers as well. 

**Edited for Community Guidelines**

[#24]

I'm sorry that this happened to you, but you should be angry with the client rather than with Upwork. Say somebody had their credit card stolen and it was used to pay you - don't you think that this person should get their money back? It's not possible for Upwork to refuse the request, and they've been cheated out of their payment as well, so you are both victims of this client.

[#25]

Hello Mrs Christine A, 

I hope you are doing well. I agree with you that if someone's card has been stolen or being used for payments he must get the funds back. But do tell me one thing. Is it the freelancer who steal  his card? If it's freelancer then freelancer should be punished. And If it's not a freelancer then that person should be punished. And In my case it's the client.

This is completely unfair with a freelancer. They should take action against this type of clients not charge back the amount from freelancers. As freelancer works harder and harder to run his profile in initial stages. we don't sleep all over the nights to win the clients and satisfy them.

Another thing is that you'll only say "sorry" because you're not suffering from this situation. It's very easy to write 5 characters for you.