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Chargebacks on Upwork

Active Member
Heather F Member Since: Sep 10, 2019
1 of 12

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. 

Community Guru
Tonya P Member Since: Nov 26, 2015
BEST ANSWER
2 of 12

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. 

Community Guru
Jennifer M Member Since: May 17, 2015
3 of 12

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.

Community Guru
Amanda L Member Since: Jan 23, 2018
4 of 12

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.


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

Community Guru
Petra R Member Since: Aug 3, 2011
5 of 12

Amanda wrote:

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.


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


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

 


Heather wrote:

 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.

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.

 

 

 

Community Guru
Tiffany S Member Since: Jan 15, 2016
6 of 12

Petra R wrote:

Amanda wrote:

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.


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


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

 


Heather wrote:

 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.

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.


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?

Community Guru
Jennifer M Member Since: May 17, 2015
7 of 12

Amanda L wrote:

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.


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


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.

Active Member
Heather F Member Since: Sep 10, 2019
8 of 12

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. 

Community Guru
Will L Member Since: Jul 9, 2015
9 of 12

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.

Community Guru
Will L Member Since: Jul 9, 2015
10 of 12

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.

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