Re: Client chargeback request of $12,500 afte... - Page 5

M A · ‎05-14-2021

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

M A · ‎01-12-2022

Hi Claudia,

Thank you for the comment. I agree with you on several points. The money should definitely be returned.

Let's say I hadn't used Upwork initially. I would've been able to verify the CC information myself and cross reference it with the client. A flag would have been raised if the credit card was named after someone else, and I wouldve taken control of the situation in the first week.

Now Upwork is my payment processor, and they insist on that to take their commission, which is fine by me. Hence, they should do their checks and verify the ownership. It is their responsibility as part of the payment processing fee they take. These are the facts, and they are as straight as they could be.

Thanks,

Al

Christine A · ‎01-14-2022

M A wrote:
Now Upwork is my payment processor, and they insist on that to take their commission, which is fine by me. Hence, they should do their checks and verify the ownership. It is their responsibility as part of the payment processing fee they take.

I see your point of view, but from a practical standpoint, I wonder how this would work. Upwork does verify the payment method by ensuring that a small initial amount goes through, so the client needs to at least have access to the account. This seems to be enough to deter most scammers (the cheque scammers and security deposit scammers are all unverified). Even in cases where a card is stolen or hacked, you'd think that the account owner would report it within a very short period of time, before much damage is done. (I can't imagine that Upwork has ever had a case in which a client has managed to put through tens of thousands in fraudulent charges over a period of two years!) So what should be done? In order to ensure that the card holder and client have the same name, Upwork would need to get proper photo ID from the client, but even then, if somebody's wallet is stolen, the thief would have access to their driver's license too. So video verification would be needed as well. Upwork already goes through this process with freelancers, but we're highly motiviated to comply in order to earn money. I wonder how many clients would be willing to jump through these hoops? I mean, imagine if you had to submit government-approved photo ID and go through a video verification every time you wanted to buy something on the Internet; it would be disasterous to the profits of any website, not only in lost business but in the additional staff required to carry this out. The 3% payment processing fee isn't going to cover it.

M A wrote:
Let's say I hadn't used Upwork initially. I would've been able to verify the CC information myself and cross reference it with the client. A flag would have been raised if the credit card was named after someone else, and I wouldve taken control of the situation in the first week.

So honestly, have you done this with non-Upwork clients before? Because I have a lot of non-Upwork clients, and I've never asked any of them for I.D. And will you be doing this with your Upwork clients from now on, after this experience?

(Apologies for all the questions - you must be pretty tired of this thread by now! But since I'm sure that this is every freelancer's worst nightmare, we're all interested in your case.)

Nichola L · ‎01-12-2022

I don't know where the OP is, but what happens if he refuses to pay - leaving aside the wrongs and the rights of the case?

(I thought it was a violation of Upwork's ToS to ask for a chargeback.)

Maria T · ‎01-12-2022

Nichola L wrote:
I don't know where the OP is, but what happens if he refuses to pay?

He and his client are in Zurich, Switzerland.

I don't know the answer to the second question.

M A · ‎01-12-2022

I asked their support this question numerous times, with the same answer. "You have to pay this amount."

That's it.

Maria T · ‎01-12-2022

Nichola L wrote:
........................
(I thought it was a violation of Upwork's ToS to ask for a chargeback.)

It is, and what they do is delete the customer's account. That's it.

(if I am not wrong)

Christine A · ‎01-14-2022

Nichola L wrote:
I don't know where the OP is, but what happens if he refuses to pay - leaving aside the wrongs and the rights of the case?

He is refusing to pay so far. Upwork told him that they'd deduct the money from his account when he gets paid for new projects, so it looks like the solution is to not do any more work through Upwork (his profile title even says that he's not looking for work and will only respond to invitations). How long they'll let this go on without suspending the account is anybody's guess.

Tom Z · ‎01-12-2022

Here's my 2 cents... Sorry this has happened. But like Petra and many have said, chargebacks is basically the bank reversing the charge. Upwork is out of 12k so that's why they're after you.

12k is a lot of money, and I see your point of the loss. You lost many hours of work, that you can't get it back.

My thought is, why not just pay Upwork off, and write 12k as a loss on your tax return?

Thank you for sharing this, it's scary to hear there's banks that allow chargebacks up to 1 year... and for a service, not like a product... even AMEX wouldn't let me chargeback something like that to the tune of $12k,.... spanning months of multiple transactions, a year later... I think Upwork in this case should ban such banks, because it exposes them and the freelancer to this exploit.

As for fraud... I mean I had to go through that once, and they required so much documentation, under oath, and it was only for $xxxx. The bank should go after the person that committed the fraud, not the merchant (Upwork). Do you know the bank's name? Definitely something I think every merchant, Upwork included, should look into.

Paul T · ‎01-12-2022

M A wrote:
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.
...........
Kindly advise,
Thanks,
Al

If everything that you wrote here is the truth and no details were skipped by you...

I think there is no connection or obligations between you and your "client's" bank. So, you don't owe anything to the bank - it was or it will be covered by Upwork. There could be some consequences for Upwork maybe or maybe not... but no legal consequences for you.

But it's completely not understandable why Upwork decided to charge you for the amount returned by chargeback. Why Upwork doesn't want to legally charge the customer who was your "client"? Like go to the police, run an investigation, etc... Why Upwork doesn't want to charge for this loss of $12,500 for their safety team/anti-fraud team/or any_other_responsible_for_that_team? Something like "hey, s*t happened, this team overlooked that, no bonuses this month for them" 🙂

Also, it looks completely weird why the bank should review the results of your work? Especially if that work and results were already approved by the client and the payments were approved by Upwork.

There is no way for freelancers how to know which credentials and payment methods any client use. And freelancers here are not obliged to know who are the clients there. Not sure if that is allowed or not at all on Upwork. But anyway, you could be banned if you try to contact a client outside Upwork.

So, I guess, if a client is able to create a contract and make payments, then a freelancer should have no worries about the credentials that the client provided. That's why we need Upwork and we are paying the fees for that. And in most cases, it works just fine.

Actually, if everything that you wrote here is the truth, then it looks like a big problem to freelancers and a huge opportunity for scammers or for anyone who wants to get work for free - seems like all that they need to do is just to request a chargeback after the job done.

And as I understand there is only the chance to avoid any debts in similar cases is to use the official tracker... no flat-rate contracts, no manual time at all.

Preston H · ‎01-12-2022

I regard original poster M A as a "hero of the Community Forum" for coming here and being willing to share so much information about a difficult, personal situation.

He has fielded questions with admirable aplomb.

Rafael M · ‎01-13-2022

Right now, Upwork is a victim just like the OP, so I'm not sure about what could be done to remediate this situation, but I believe it would be important for Upwork to learn something from it and start thinking about a more rigorous system for vetting a client's payment method.

Just the other day, I was filling my bank account info on Upwork, and I was warned that it had to be an exact match of the personal documentation I've sent them for ID verification.

Wouldn't it be reasonable that they started demanding the same from clients? Ok. It's perfectly understandable that a business could use several different cards with different names on them but in that case, wouldn't it be reasonable to verify the card owner's ID as well?

In my opinion, this is clearly a flaw in the system, which needs to be addressed, otherwise, as somebody else said, scammers could easily take advantage of it.

I'm sorry about what happened to you, M A. 12.000USD is a lot of money, and I would certainly sue the client if this was happening to me, especially since he lives in the same country as you, which makes things way simpler than suing internationally.

Paul T · ‎01-13-2022

Rafael M wrote:
Right now, Upwork is a victim just like the OP....

I would certainly sue the client if this was happening to me, especially since he lives in the same country as you, which makes things way simpler than suing internationally.

He can't sue the client - there were no finance transactions between OP and this client.

But there were transactions between the client and Upwork, and after that, between Upwork and M A. It works here like CLIENT <-> UPWORK <-> FREELANCER, is not it?

So, Upwork can sue the client.

But probably some details were skipped by OP, not sure if everything is the truth in his story.

Claudia Z · ‎01-13-2022

Paul T wrote:
Rafael M wrote:
Right now, Upwork is a victim just like the OP....

I would certainly sue the client if this was happening to me, especially since he lives in the same country as you, which makes things way simpler than suing internationally.

He can't sue the client - there were no finance transactions between OP and this client.

But there were transactions between the client and Upwork, and after that, between Upwork and M A. It works here like CLIENT <-> UPWORK <-> FREELANCER, is not it?

So, Upwork can sue the client.

The contract is between the client and freelancer!

"If a Client and Freelancer decide to enter into a Service Contract, the Service Contract is a contractual relationship directly between the Client and Freelancer. "

https://www.upwork.com/legal#CONTRACTUALRELATIONSHIP

https://www.upwork.com/legal#purposeof

The freelancer wouldn't have been asked to repay the chargeback if the client sorted out the issue and paid. If the freelancer doesn't pay either then his/her account is permanently suspended.

Paul T · ‎01-13-2022

Claudia Z wrote:
Paul T wrote:

He can't sue the client - there were no finance transactions between OP and this client.

But there were transactions between the client and Upwork, and after that, between Upwork and M A. It works here like CLIENT <-> UPWORK <-> FREELANCER, is not it?

So, Upwork can sue the client.

The contract is between the client and freelancer!

"If a Client and Freelancer decide to enter into a Service Contract, the Service Contract is a contractual relationship directly between the Client and Freelancer. "

I wrote about the financial transactions. But anyway, I could wish you good luck if you want to bring this contract to your bank and explain something regarding the payments you received/paid from/to Upwork and how these payments are related to the contract you have with someone else.

Claudia Z wrote:

The freelancer wouldn't have been asked to repay the chargeback if the client sorted out the issue and paid. If the freelancer doesn't pay either then his/her account is permanently suspended.

This is completely weird - looks like "Sorry, we tried but we can't cover our financial loss from our client who frauded us and the freelancer as well, then we decided to charge the freelancer" 🙂 I guess something different happened.

And I really hope that Upwork will improve something in terms of verification of the clients' credentials and their payment methods.

Claudia Z · ‎01-13-2022

Paul T wrote:
This is completely weird - looks like "Sorry, we tried but we can't cover our financial loss from our client who frauded us and the freelancer as well , then we decided to charge the freelancer" 🙂

Between the freelancer and client it was a contractual relationship. The OP is asked to return money he received from a possible fraudulent activity.

Don't you think there should be some consequences? What if a freelancer notices some red flags but continue working thinking oh this is Upwork's responsibility, I'll get paid regardless.

Paul T · ‎01-13-2022

Claudia Z wrote:
Paul T wrote:
This is completely weird - looks like "Sorry, we tried but we can't cover our financial loss from our client who frauded us and the freelancer as well , then we decided to charge the freelancer" 🙂

What if a freelancer notices some red flags but continue working thinking oh this is Upwork's responsibility, I'll get paid regardless.

But what if he did not? Or just didn't consider that because the client was "approved" by Upwork.

You know, there are no options for freelancers to check the info like "Mr. Joe White using a stolen credit card with name Smith Black on that, and provided an ID with a monkey on photo" which could look definitely suspicious. But there are options available for Upwork.

Claudia Z · ‎01-15-2022

Paul T wrote:
But what if he did not? Or just didn't consider that because the client was "approved" by Upwork.

It is not what one thinks it is or it should be. It is what the Site Terms sais it is.

I get it, I never had a dispute or refund, I have no reason to think that Upwork isn't safe. I do have expectations from Upwork to keep it safe, at a reasonable cost.

Do you think that it would be reasonable to pay 50% commision fees to Upwork, to quarantee that they will absorb any possible chargebacks? I don't think so ...

Petra R · ‎01-15-2022

Claudia Z wrote: Do you think that it would be reasonable to pay 50% commision fees to Upwork, to quarantee that they will absorb any possible chargebacks? I don't think so ...

And let's not forget that our fees are going towards plugging the hole these $12.500 have created...

We're the ones paying for it, the OP hasn't paid a Cent of it to date and doesn't intend to unless forced.

Paul T · ‎01-15-2022

Claudia Z wrote:
Paul T wrote:
But what if he did not? Or just didn't consider that because the client was "approved" by Upwork.

It is not what one thinks it is or it should be. It is what the Site Terms sais it is.

I get it, I never had a dispute or refund, I have no reason to think that Upwork isn't safe. I do have expectations from Upwork to keep it safe, at a reasonable cost.

Do you think that it would be reasonable to pay 50% commision fees to Upwork, to quarantee that they will absorb any possible chargebacks? I don't think so ...

No problem, then UW just needs to remove the badge "Payment verified" in case the credentials don't much for 100%, you know, just to avoid any possible misunderstanding or misinterpretation and add something like " Payments methods under different credentials. Be advised, chargeback is possible" .

Claudia Z · ‎01-15-2022

Paul T wrote:
No problem, then UW just needs to remove the badge "Payment verified" in case the credentials don't much for 100%, you know, just to avoid any possible misunderstanding or misinterpretation and add something like " Payments methods under different credentials. Be advised, chargeback is possible" .

"By providing Payment Method information through the Site and authorizing payments with the Payment Method, Client represents, warrants, and covenants that: (a) Client is legally authorized to provide such information; (b) Client is legally authorized to make payments using the Payment Method(s); (c) if Client is an employee or agent of a company or person that owns the Payment Method, that Client is authorized by the company or person to use the Payment Method to make payments on Upwork; and (d) such actions do not violate the terms and conditions applicable to Client’s use of such Payment Method(s) or applicable law."

https://www.upwork.com/legal#PAYMENTMETHODS

You acknowledge, agree, and understand that Upwork is not a party to the relationship or any dealings between Client and Freelancer. Without limitation, Users are solely responsible for: (a) ensuring the accuracy and legality of any User Content; (b) determining the suitability of other Users for a Service Contract (such as any interviews, vetting, background checks, or similar actions); (c) negotiating, agreeing to, and executing any terms or conditions of Service Contracts; (d) performing Freelancer Services; and/or (e) paying for Freelancer Services. You further acknowledge, agree, and understand that you are solely responsible for assessing whether to enter into a Service Contract with another User and for verifying any information about another User, including Composite Information (defined below). Upwork does not make any representations about or guarantee the truth or accuracy of any Freelancer’s or Client’s listings or other User Content on the Site; does not verify any feedback or information provided by Users about Freelancers or Clients; and does not perform background checks on or guarantee the work of Freelancers or Clients.

https://www.upwork.com/legal#relationshipwithupwork

Paul T · ‎01-15-2022

Yes, I read these docs before. And I accepted that.

But there are no contradictions between these docs and my "badge" suggestion. Just the things could look more clear, and freelancers could make a decision to take the risks and work with a client who doesn't represent himself but represents a company, 3rd party, etc, and use corporate credit cards, 3rd party credit cards, etc., OR just avoid such a client for safety reasons (like chargebacks, etc).

You could see there are a lot of similar "refund" and "chargeback" topics...

Claudia Z · ‎01-15-2022

Paul T wrote:
Yes, I read these docs before. And I accepted that.

But there are no contradictions between these docs and my "badge" suggestion. Just the things could look more clear, and freelancers could make a decision to take the risks and work with a client who doesn't represent himself but represents a company, 3rd party, etc, and use corporate credit cards, 3rd party credit cards, etc., OR just avoid such a client for safety reasons (like chargebacks, etc).

You could see there are a lot of similar "refund" and "chargeback" topics...

What prevents you from gathering information before starting or continuing a contract, to make your own decision? Is it a company , is it a person, who is funding the project.

Merchants are dependent on the card issuer to prevent and detect unauthorized charges, alert card holder for irregular activities ... Upwork doesn't rely solely on card issuer to validate the charge, there are some other measures ... ie releasing funds after 5 days, may perform additional checks ID verification whatever.....

Paul T · ‎01-15-2022

Claudia Z wrote:
Paul T wrote:
Yes, I read these docs before. And I accepted that.

But there are no contradictions between these docs and my "badge" suggestion. Just the things could look more clear, and freelancers could make a decision to take the risks and work with a client who doesn't represent himself but represents a company, 3rd party, etc, and use corporate credit cards, 3rd party credit cards, etc., OR just avoid such a client for safety reasons (like chargebacks, etc).

You could see there are a lot of similar "refund" and "chargeback" topics...
What prevents you from gathering information before starting or continuing a contract, to make your own decision? Is it a company , is it a person, who is funding the project.

And which information are you able to gather about clients there? Ask a client " who are really you?" 🙂

- Are you not a scammer?

- 100%, I'm not;

- Are you going to use your own card and no one will not request a chargeback?

- Of course not, this card [was stollen and the owner still not noticed] is mine, I can make 2-sides copy and send it to you;

- And your address please too - I will check your credentials and forget it immediately after that;

Something like that?

------

Thankfully, most of the people here are good people - great clients and the best freelancers as well. But if someone, who is not a good one, wants to scam you - be sure he will. Just because the current system of payments, as we can see, is based only on trustful relationships.

And this guy who started this topic here - maybe he is a victim maybe he is not, actually created something like "HOW-TO" for them and shared it at every corner of the Internet.

Claudia Z · ‎01-15-2022

Paul T wrote:
And which information are you able to gather about clients there? Ask a client " who are really you?" 🙂

It depends ... if a client is telling you "I forgot that there is a credit card connected in my account that wasn’t actually mine” ... you ask ... were you authorized to use this card? Who is this person, is it a business partner? You don't just let it go ...

If a client is telling you about having issues with Upwork and the card, and you are aware manual hours aren't protected ... you investigate a little, get some peace of mind things don't turn against you.

Excerpts from OP website:

"In 2018, I signed a client as usual. Let’s call him “Robin”

"I meet Robin, and we conduct a brainstorming session and a few meetings. The only reasonable thing to do at this stage is to add manual hours..... I recorded manual hours, lots of them."

"Anyway, that lasted for a couple of years and ended when he informed me that he has issues with Upwork and his credit card. "

"I’ve worked with him till Sept of 2020"

"Until May of 2021, when I receive an email from Upwork: We are writing today to let you know that a payment made to your account has been reversed by your client’s bank."

"Is Robin really asking for a chargeback? That’s impossible. I start investigating by calling Robin. He apologized and said he never called any bank, additionally, he said this is a bit of a mess-up as he forgot that there is “a credit card connected in his account that wasn’t actually his”.

Paul T · ‎01-15-2022

Claudia Z wrote:
Paul T wrote:
And which information are you able to gather about clients there? Ask a client " who are really you?" 🙂

It depends ... if a client is telling you "I forgot that there is a credit card connected in my account that wasn’t actually mine” ... you ask ... were you authorized to use this card? Who is this person, is it a business partner?

If a client is telling you about having issues with Upwork and the card, and you are aware manual hours aren't protected ... you investigate a little, get some peace of mind things don't turn against you.

Sorry Claudia, I don't believe in pink ponies and unicorns.

If a client is a scammer then he will tell to freelancer a story that the freelancer wants to hear. And there is no way for freelancers to know if it was truth or not.

In case of a bad client it would be like that:

- do you use your own card?

- sure, no worries!

....

Job done. Chargeback. End of story.

Similar happened with M A

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