Client chargeback request of $12,500 after one year.

[al-anani]

Hi!

I worked for a client a year ago, and we finished alot of work together with different people creating websites, etc.

I used to record all hours manually as they’re mostly calls and communication, as I’m a project manager.

Now, one year later, Upwork is sending me an email that the bank is requesting a chargeback of more than $12,500 from my contract one year ago.

Then a few more freelancers who used to work with the same client contacted me and told me Upwork informed them with the same thing but with different amounts. I have a feeling that this client was a fraud or using another person’s account, or went broke.

Whatever the reason is, doesn’t matter. Upwork now is asking for proof of my work, which I sent, to TRY to tell the bank that those charges were done for freelancers who actually worked on something. But they also said the final decision will be the bank’s. So I feel my odds are not too great.

I contacted this client and he informed me he didnt do any chargebacks, validating my theory abit more that he is a fraud or broke.

The problem is, Upwork is freezing my withdrawals from my account till I pay the $12,560.

I do not have this amount, and I do not know what to do.

All of this is because according to Upwork, I did not log in the hours with their software and did it manually instead.

This is demotivating me from this platform after 3 years full time of working on it and being Top Rated Plus.

If anyone has any advice, please share.

Also a couple of questions, what if I refuse to pay even after the bank decided that they want the money back, does that put me in a bad legal position or could only lead to my account being banned?

If my theory is proven correct and this client was actually using another person’s card, shouldn’t that put Upwork the least bit accountable for anything?

The process of speaking to a bank could take 45 days, so I’ll just sit and do nothing till then.

Kindly advise,
Thanks,
Al

[AndreaG]

Hi M,

I'm sorry to hear about this situation. We've escalated your concern to the team and they will be assisting you via support ticket. You'll receive an email notification once your ticket is updated and can continue to access it here.

Thanks!

[ashrafkhan81]

Hey M.A, it is very surprising to learn this happening with an hourly contract and that too after a year! 

Your post was mentioned on another chargeback-related thread, so I am curious to know how your case turned out? Did you have to pay or was it resolved? 

I am also surprised there is not much activity on this threat here!

[al-anani]

Hello Ashraf,

Not a lot of updates on this.

I'm still asked to refund the amount. My withdrawals are frozen.
The support are informing me that they consider this matter "closed", and are asking me to pay back the full amount.

Thanks,

Al

[petra_r]

---

M A wrote:

The support are informing me that they consider this matter "closed", and are asking me to pay back the full amount.

---

Of course they are. You owe Upwork the money, which is why they are asking you to pay it. Your friend "Robin" (the client") owes you the money.

[al-anani]

Hi Petra,

I wouldn't owe the money to Upwork, if I had used the hourly tracker (which I did in some of my work, thank god, and that's why they're not asking for more than $30k) instead of recording manual hours for face to face meetings, planning meetings, etc.

Even though, the client stole from the credit card owner, if I had started the hourly tracker, then they wouldn't be asking for the money back.

Thanks for all your comments!

[petra_r]

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M A wrote:

Even though, the client stole from the credit card owner, if I had started the hourly tracker, then they wouldn't be asking for the money back.!

---

Yes, you would. Except for $2500. That is the limit of the protection per client.

---

M A wrote: (which I did in some of my work, thank god, and that's why they're not asking for more than $30k)

---

No, they wouldn't. There is a limit how far back the card issuer allows a chargeback. The owner of the credit card did a chargeback for as far back as the card issuer allowed them.

[al-anani]

That's why I wrote the article. This clearly means that any freelancer with a contract, who works on Upwork, should always be aware, that even after a year, this money is not for sure her/his. It could be asked back for, which is an enormous con in the freelancing world. Everyone should be aware of such a point. 

As for Upwork, they could simply double check that the credit card owner is the same as the client, at least that would decrease such situations.

[alexandernovikov]

Big question here is how were the chargebacks possible a year later. For most banks deadline is 3 months or 6 months at most.

[petra_r]

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Alexander N wrote:

Big question here is how were the chargebacks possible a year later. For most banks deadline is 3 months or 6 months at most.

---

Switzerland... 

And it was "$12.5k" (rather than $38k++) because that's all there could be charged back, the rest was outside the deadline by which a chargeback can be done.

[ashrafkhan81]

Hard luck man!

And also I missed the part about "manually" recording "all" the hours! I think that is where it all went wrong! 

So what is happening now? Are there any collection efforts from Upwork? Are you still working on Upwork and trying to pay them? 

[petra_r]

---

Ashraf K wrote:

And also I missed the part about "manually" recording "all" the hours!

---

He'd only have been protected for $2500 even if he had tracked every minute of that time. And the $12500 is less than a third of what the freelancer earned from that client.

There is a lot more to this story than meets the eye.

[al-anani]

I can only assume that he's been using the same card from day one. I've worked with this client for close to two years, an equivalent of 1533 hours ($38k). Initially, I used the tracker because we were not in the same country and the work was easy and straight forward. 

Then when I moved to Zurich, I met him. Then around a year later, they asked for a refund of $12k, which is as you indicated a third of what I worked for. I'm unaware of whether this was the only portion that was manually, I doubt it, yet I don't exactly know the ratio of manual hours vs tracker.

Still, at the end of the day, I've provided Upwork with more than enough evidence to show my work, which is why this is frustrating.

The whole idea of the article is two things:-

1. If I'd be able to reach something higher than the "executive escalations", then that would be very good. As they're sort of a high power that I can't even complain at. (Literally, that's what a support agent told me.)

2. I'd showcase to the world that with everyone transitioning into freelancing, there are risks that should be put in consideration. That those freelance websites should not be taken for granted and might, even if you did not do anything wrong, and worked truthfully, cause you damage.

Thanks for all your comments!

[marc_compte]

---

M A wrote:

I can only assume that he's been using the same card from day one. I've worked with this client for close to two years, an equivalent of 1533 hours ($38k). Initially, I used the tracker because we were not in the same country and the work was easy and straight forward. 

Then when I moved to Zurich, I met him. Then around a year later, they asked for a refund of $12k, which is as you indicated a third of what I worked for. I'm unaware of whether this was the only portion that was manually, I doubt it, yet I don't exactly know the ratio of manual hours vs tracker.

Still, at the end of the day, I've provided Upwork with more than enough evidence to show my work, which is why this is frustrating.

The whole idea of the article is two things:-

1. If I'd be able to reach something higher than the "executive escalations", then that would be very good. As they're sort of a high power that I can't even complain at. (Literally, that's what a support agent told me.)

2. I'd showcase to the world that with everyone transitioning into freelancing, there are risks that should be put in consideration. That those freelance websites should not be taken for granted and might, even if you did not do anything wrong, and worked truthfully, cause you damage.

Thanks for all your comments!

---

I'm sorry for you and wish you best luck. Luckily for me, I have never found myself in this situation anywhere, but I don't understand how the fact that you two happened to meet through Upwork has anything to do with him using a stolen card, which seems to be the main problem.

I mean, if you met this guy outside Upwork, wouldn't the situation be the same? The only difference is that the bank would have removed it directly from your account instead of Upwork's, isnt' it? Or am I missing something?

[al-anani]

Hello Ashraf,

Thank you for your comment! I met the client face to face for quite a while after I met him on Upwork. I met him in person in Zurich. We would work in his office. We would spend hours planning on a board how to design and construct a document.

These hours had to be entered manually. It didn't make sense to open a tracker to an empty desktop screen and click a button every now and then. Even though, according to Upwork's ToC, if I had done that, they wouldn't have asked me for any money back.

No efforts from Upwork. My withdrawals are frozen. I can work, but I won't withdraw any of those funds. So I need to work to make an equivalent of $12.5k in order to return to normal. 

Thanks,

[petra_r]

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M A wrote:

These hours had to be entered manually. Even though, according to Upwork's ToC, if I had done that, they wouldn't have asked me for any money back.

---

Yes, they would, all but $2500, which is the limit of the hourly protection per client.

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M A wrote:

I can work, but I won't withdraw any of those funds. So I need to work to make an equivalent of $12.5k in order to return to normal. 

---

But you're not working, are you... Or at least not via Upwork. You have put

"[Invite Only]" at the beginning of your title line.... It does beg the question what you do with any such invites, doesn't it?

[al-anani]

Well, as you mentioned, he paid me over $30k, and they asked for $12.5k which doesn't even make sense as the upwork payment protection doesnt cover except $2.5k, so they should have asked for all the $28k.

Have you seen my work, Petra?

I've simply put the invite only as I don't have the motivation to send any proposals most of the time. If an invite comes over with a ticket price of $10k+, I could take it on and get this thing over with, even though I, and many others, would deem it unfair.

If you are referring to working outside of Upwork, I wouldn't need to make my profile "invite only" in order to do so.

It's also something that would make me stand out amongst others when showing up as an option for the client to invite. There you go, a tip for you.

Thanks,

Al

[petra_r]

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M A wrote:

Well, as you mentioned, he paid me over $30k, and they asked for $12.5k which doesn't even make sense as the upwork payment protection doesnt cover except $2.5k, so they should have asked for all the $38k.

---

Again: No. The rest of the transactions were outside the time-window when a chargeback could have been done.

And they didn't "ask for it back" - the bank TOOK it back. Upwork PAID that money. You didn't. 

[tomzilla1]

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Petra R wrote:

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M A wrote:

Well, as you mentioned, he paid me over $30k, and they asked for $12.5k which doesn't even make sense as the upwork payment protection doesnt cover except $2.5k, so they should have asked for all the $38k.

---

Again: No. The rest of the transactions were outside the time-window when a chargeback could have been done.

And they didn't "ask for it back" - the bank TOOK it back. Upwork PAID that money. You didn't. 

---

@ M A --- I would listen to Petra on this one. Are you from the US by the way? Maybe the concept of chargeback is a bit different in wherever you are. Essentially a chargeback is, if approved by the bank, the bank reverses all of the transactions the bank customer disputes, and the merchant (Upwork) has absolutely no say generally speaking in it, especially if the reason is fraud. But if you read my original response to you, can you share with us the Bank's name? This way we can maybe petition Upwork to ban that bank. As it is obviously hurting Upwork and you as the freelancer - Upwork didn't make any % out of it, and you didn't get paid for the numerous hours you put into it. But for now, I think your only recourse if I were you, is to pay back Upwork, so you don't get banned -- continue to work on Upwork, and write off the $12k or so on your tax return.

[alexandernovikov]

Question here, why didn't you just ask the client to pay the amount again with another payment method? Especially since there is no reason for you to not trust the client as  per your words, only 12.5k out of 38k were charged back. If the client a good person, not doing it will amount to scamming you from his side.

Or he denies that he requested and/or received the chargeback? If that is the case, i think it is fair to ask Upwork support to get some scan of an official paper from the bank that Upwork paid the money back... That should be convincing enough, no client will want to go to court over mere 12k in a situation where it would be a certain loss.

The story of yours is all over the Internet and i have to say that it sounds fishy, some parts of it just don't align. I have to say i don't quite trust your version of the story.

[al-anani]

Hello Alexander,

I did, and he procrastinated until I actually gave up. He knows that there's a current problem with Upwork, and refuses to resolve it. As per the article, it's very obvious that I was wrong about him being "nice".

He denied that he provided the chargeback as well. Upwork support is not helping by any means, as I mentioned they're closing conversations with me.

It is what happened in as much detail as I could remember. Perhaps, a better writer could've written further details that would clarify some questions. I'm more than happy to answer any questions from your side, or from any others.

[alexandernovikov]

Then situation is clear: you have been scammed by a guy who stole someone else's credit card number. Any platform in place of Upwork would do the same because doing otherwise would mean all carders of the world will be there to cash out their stolen CC numbers. In fact, they are being overly nice by not pursuing you to actually pay back the amount - you are free to go if you drop your Upwork account.

Only question left is how they managed to attach this payment method. They opened an account in one name and paid with a CC on another name? And that worked? I thought there was a verification system in place for the client CCs?

But if the account itself was opened in the name of the person who was scammed, then Upwork couldn't do anything. Placing in a full identity verification system for clients - with a video call, showing and sending ID scan, and so on, would diminish the inflow of them onto the platform, starving all of us of work, and probably ending Upwork as we know it. Client's flow should be as friction-free as possible or they will go somewhere else - i understand there is no possible "fix" to it.

But, there *is* an identity verification system for clients. It's just invoked only in exceptional cases - like out-of-the-blue client quickly paying someone a very large amount. It happened to me twice - once when a client hired me on a much higher rate than normal (i just increased rates in hope it will work, and it did), and once when a client sent me a "fat finger" bonus (i think 17K instead of 1700?) - in the latter case both me and client were checked. That is understandable. But it is not realistic to have it in place for each and every client - clients will simply turn away not willing to go through that pain.

TL;DR: understanding that on paper, you are right, situations like this are unavoidable because every business operates within a certain set of technology- and market-imposed constraints, simply put we are not living in a perfect world.

[prestonhunter]

re: "Only question left is how they managed to attach this payment method. They opened an account in one name and paid with a CC on another name? And that worked? I thought there was a verification system in place for the client CCs?"

There is no such name-based verification system for client payments.

Clients may indeed use credit cards of other people - credit cards not in their name.

[alexandernovikov]

And there is no thing like "enter the two random small amounts we just charged to prove you have access to the bank account"?

[wlyonsatl]

Alexander N.,

There is a difference between "have access to" and "have authorized access to."

Credit card and other bank-related fraud is all possible because criminals find ways to get "unauthorized access to" financial accounts.

Upwork's not going to solve that problem on its own, though it could do a bit more.

[petra_r]

---

Alexander N wrote:

And there is no thing like "enter the two random small amounts we just charged to prove you have access to the bank account"?

---

There is. That credit card will have been verified the way you describe above, and it's most likely that initially the use was authorized.

Until it no longer was.

Or a business relationship went sour.

Or a marriage.

Just because use was authorized once or 5 times or for a year, that doesn't mean "forever".

[alekseevpavel78]

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Petra R wrote:

---

Alexander N wrote:

And there is no thing like "enter the two random small amounts we just charged to prove you have access to the bank account"?

---

There is. That credit card will have been verified the way you describe above, and it's most likely that initially the use was authorized.

---

There is not.

I added one more CC to my "client's" account just a few days ago without any verification. Of course, that is my card and there is exactly the same name on as my account name, and account already proved by many contracts and payments, by tax ID, etc. ... but anyway, the card was added without any verification and 2 minutes later I used this new "unverified" card to created I fixed-rate contract.  And yes, it was convenient for me...

But in fact - in some cases, it's possible to add a credit card without verification, and we don't know which criteria "if/then" works there.  

[petra_r]

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Paul T wrote:

---

Petra R wrote:

---

Alexander N wrote:

And there is no thing like "enter the two random small amounts we just charged to prove you have access to the bank account"?

---

There is. 

---

There is not.

I added one more CC to my "client's" account just a few days ago without any verification. 

---

OK, let's say "There usually is".

---

Paul T wrote: Of course, that is my card and there is exactly the same name on as my account name, and account already proved by many contracts and payments, by tax ID, etc. 

---

There you go...

[alekseevpavel78]

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Petra R wrote:

---

---

OK, let's say "There usually is".

---

Paul T wrote: Of course, that is my card and there is exactly the same name on as my account name, and account already proved by many contracts and payments, by tax ID, etc. 

---

There you go...

---

You can't be sure which criteria using there. Maybe you just need to have something like a "1-year old" account and 5 finished contracts.

[claudiacezy]

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Paul T wrote:

I added one more CC to my "client's" account just a few days ago without any verification.

---

Did your bank sent you an email/sms about the charge? Does it show in your account a flagged transaction that there is a charge with a merchant you didn't use previosuly? Does your bank require to input a security code when you use the card to purchase online? Do you see the transaction in your bank statement? If not ... then you should look if your bank offers such options ... if not ... change the bank!

[alekseevpavel78]

Thank you very much for your advice.... 🙂 but I think you have a bit of misunderstanding of how banks could process payments in some cases.

And the bank is a big one in the North American continent.  Each other is similar here more or less 🙂

[tagrendy]

I wonder if somebody steals my credit card info and buys a car with it, can I a year later go to the car dealership and ask the money back. I'm not sure about the laws, but it seems illogical in fraudulent cases like this for the Freelancer or Upwork itself be owing money to the rightful card-owner. 

[petra_r]

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Tatevik G wrote:

I wonder if somebody steals my credit card info and buys a car with it, can I a year later go to the car dealership and ask the money back.

---

Depending on the rules of your credit card company, a chargeback can include charges up to a year ago. In most cases the limit is 3 to 6 months.

Your example doesn't quite work. Your credit card issuer would take the money from the car dealership, who would then go after the "buyer".  If they can't find the buyer, they lost the money.

You don't go to the car dealership.

You don't go anywhere other than to your bank.

---

Tatevik G wrote:

it seems illogical in fraudulent cases like this for the Freelancer or Upwork itself be owing money to the rightful card-owner. 

---

Who would you expect to be owing the money to the card owner?

That's the way it is. The bank took the money out of Upwork's account. There was nothing Upwork could do to prevent that. They fought the chargeback, but winning an unauthorized use chargeback is very hard, often impossible.

[wlyonsatl]

Tatevik,

The bank will have reversed the original payment to Upwork, so Upwork has had to repay that money to the bank as the original recipient of the payment from the "client's" credt card..

Upwork wants that loss it has now incurred due to the refund to the bank covered, so they require a refund from the freelancer, who is now on the hook for returning the money Upwork paid to him due to no fault of his own.

Not all banks allow for credit card holders to wait so long to contest charges to their credit cards, but that is usually a matter of the credit card owner's or the bank's local law or the rules of the national or international credit card organization.

To avoid this problem for large value projects Upwork should allow for client and freelancer to agree to use a direct bank-to-bank wire transfer from the client's bank to Upwork's bank to fund either fixed milestone or hourly work payments as true escrow. The cost and  extra effort of using such a payment process would not be worthwhile on small projects, but this would create an escrow account balance that would be much less likely to be reversible by a dishonest client. So Upwork (and hard-working freelancers) would not experience such reversals of payment as M A has experienced here. 

[tagrendy]

Thanks for clarifying, I guess I thought the bank that issued the card would take the losses or the original card owner. 

Another easier thing to implement would be asking the client to send a photo or video of the credit card where you can see the name and see if there is a mismatch. Clients who spend a lot of money on Upwork maybe could be required to pass that verification on top of simply verifying that credit card works. 

[a_lipsey]

On your blog you wrote that you're one good terms with the client, not that he's a fraud or broke. Apparently he also lives locally. Why don't you pursue it in small claims court? 

[al-anani]

Hello Amanda,

I used to be on good terms before this problem occurred, now I'm absolutely not.

Hundreds of comments are directing me towards going legal, it's just not my area of expertise. I'm a business consulting freelancer. Yet, I might eventually have to.

[a_lipsey]

You clearly have grounds against the client. I would pursue this before it gets too far away. It's already 6 months past the reversal of the charge. 

[petra_r]

You do understand that if you "go legal", such legal action will have to be directed at your client, not at Upwork, right? 

How far you'd get with that given that you haven't actually had any losses because you so far haven't paid Upwork what you owe them, would remain to be seen..... I would suspect that legal action might become somewhat complicated.

---

M A wrote:

I used to be on good terms before this problem occurred

---

I don't think you were. The contract, worth a couple of Dollars short of $38k, was ended in July 2020 by yourself without feedback from the client, and just 5 stars without a word from yourself, indicating that not all was sweetness and light at that point. Who works with a client for that long and for that much money and doesn't even have a handful of words to say about it if all was well?

Also, you wrote the post here, where you call the client fraudulent, many months before you wrote your blog post, in which you describe the client as such a super nice person you trusted so much.

[al-anani]

Hello Petra,

I do understand. Again, I'm not a legal person. I'm only focused at what I do.

I did ask for feedback after the contract, the client said himself that Upwork deactivated his account, so he can't give me feedback, which is true if your account is deactivated, you can't even log in.

I did trust the client. But that's irrelevant. I'd assumed that even if he went broke or that he was not a "good" person, that wouldn't be my problem. I did everything with him on legal grounds, designs, documents, etc. 

The client being super nice, is irrelevent to him being fraudulent. Frankly, in both cases, that is supposed to be Upwork's responsibility of vetting him before allowing him to hire me for over 1500 hours, and then asking me back for third of that.

Thanks,