Dispute arbitration, where Freelancers lose

sourceprouk · ‎06-22-2021

I have come to the conclusion that it is risky and hardly worth taking low value fixed jobs with money in Escrow.

With a fee of $291.00 for arbitration. If a job is equal or lower in value to this amount, a rogue client can simply refuse to pay. Then the freelancer will see that he would not earn anything (or lose more money) if he takes the matter to arbitration. If neither party takes the matter to arbitration, the Escrow money is simply returned to the client and voila, he got a job for free. A rogue client will know the dilemma, for the Freelancer, about paying the arbitration fee.

Furthermore, he is likely to give you a double whammy by damaging your rating, leaving you with bad feed-back.

Not only that, but often the arbitrators simply want to make the job easy for them by splitting the money between the client and Freelancer, so, on a job worth $300, the freelancer could end up paying $291 for the arbitration and getting $150 for his work, a clear loss added to his time working on the dispute.

I know, from experience, that the arbitrators find it easy to simply blame both parties. For the fee they get, they are not going to spend hours and hours analysing the case.

On a job worth $600.00, the freelancer can spend $291 on arbitration and get $300 back, so he still lost quite a bit of money here.

On lower value contracts, I am telling the clients that I will only work on an hourly rate; then, on the first week I only do some work in order to test them and see if they will be paying for the work I did on the first week.

wlyonsatl · ‎06-22-2021

Federico,

I doubt anyone, not even Upwork, would try to convince you that arbitration is a useful potential solution on low-price projects.

The only perfect solution would be to not take low-value projects, but there are freelancers who to some extent depend on such projects for their livelihood. And they provide fee income to Upwork, though it is not public information to what extent that is true.

The best solution I can see is to provide freelancers with some meaningful details about potential clients' history of refunds, project cancellations, arbitrations, etc. Freelancers then would have a better, though imperfect, understanding of what they're getting into with a new client.

By the way, since hourly payment protection is far, far better than fixed price payment "protection" your idea to test the waters with a new client using an hourly contract won't really be a reliable indicator about your security of payment if you later switch to fixed price contracts with the same client.

sourceprouk · ‎06-23-2021

Hi,
No, I did not say test them with a provisional hourly contract and then return to a fixed fee contract. I meant stay in the hourly contract.

Yes, I have seen many client reviews, on low value jobs, where freelancers complain that the client simply refused to pay. This means that they did not go to arbitration, they just accepted they lost the money. Of course I do not work for clients with those reviews.

And yes, there are many freelancers for whom low value jobs are the largest proportion of their work, so they are the ones who are mainly affected by this problem. They have to take the jobs.

However, your idea of providing a client profile with their history of disputes, cancellation etc, does not work with new clients and there are a lot of them in Upwork. Even with clients who have had one or two jobs done in Upwork, there is not sufficient information.

feed_my_eyes · ‎06-22-2021

Federico D wrote:
I have come to the conclusion that it is risky and hardly worth taking low value fixed jobs with money in Escrow.

With a fee of $291.00 for arbitration. If a job is equal or lower in value to this amount, a rogue client can simply refuse to pay. Then the freelancer will see that he would not earn anything (or lose more money) if he takes the matter to arbitration. If neither party takes the matter to arbitration, the Escrow money is simply returned to the client and voila, he got a job for free. A rogue client will know the dilemma, for the Freelancer, about paying the arbitration fee.

It's equally risky for the client, though. If a client doesn't want to pay a small fee for their project, then they won't want to pay $291 for arbitration either, because they could lose both amounts. The freelancer actually has less to lose, and more to gain.

If a client ever challenged me - even on a small project - I wouldn't hesitate to call their bluff, because I would be confident that I did the project properly and delivered it on time (and if that were ever not the case, then I would willingly offer a refund).

petra_r · ‎06-22-2021

Christine A wrote:
The freelancer actually has less to lose, and more to gain.

Exactly. With the freelancer being the first to be able to pay for arbitration, the chance of the client paying $291 to get LESS than that back are minimal. They will, in general, put their hands up and give in. That means the freelancer gets both the arbitration fee back AND the funds in escrow.

The trick is to avoid disputes (let alone arbitration) altogether as much as possible through careful vetting of clients and effective project management. If disputes are a very rare exception (less than 3% of contracts result in a dispute according to Upwork, mine is is about a third of a percent or 1 dispute overall where I walked away with all the money without arbitration) there is no need to fear small (or big) fixed rate contracts because the issue just happens so rarely.

sourceprouk · ‎06-23-2021

Well, this is not true. I invite you to go and read through several bad reviews that feelancers wrote about clients who refused to pay on low value jobs. They simply accepted they lost the money. So, no, arbitration is not advantageous to the freelancer in a great deal of cases.

sourceprouk · ‎06-23-2021

The arbitrators do not know about every job category in Upwork. For instance in my field, if a client says: "that was a bad design" they do not know how to judge this, hence their taking the easy way out and splitting the fee between the client and freelancer.

And with the arbitration money, there would not be enough to call in a specialist in the field to assess the work.

sourceprouk · ‎06-23-2021

You need to consider that there are deluded clients who also think: "I will call the freelancer's bluff" and they accept the arbitration. That IS what puts the freelancer in the very difficult position.

If the client ends up losing his $291 and is told, by the arbitrator, to pay a $100 job fee, that does not help the freelancer who lost money when he is cetain he delivered the job.

wlyonsatl · ‎06-22-2021

Federico,

As good as it might feel to throw caution and net income to the wind and agree to pay $291 to force a client to go to arbitration, we were told earlier this year by Ciprian M., "The mediator insisted that a third-party arbitration is no need to go forward on my case because is time-consuming and costs money.

https://community.upwork.com/t5/Freelancers/What-are-my-chances-of-winning-a-third-party-arbitration...

If I remember correctly, the value of the project in that case was $175, well below the breakeven point for Upwork to earn fees just equaling Upwork's own $291 cost of a dispute going to arbitration (which equates to a contested amount/project valueof $2,410).

So, arbitration is useful only to freelancers who can afford to pay $291 (which may be a minority of Upwork freelancers) and is not always going to be alllowed by Upwork on low value projects anyway.

petra_r · ‎06-22-2021

Will L wrote:
"The mediator insisted that a third-party arbitration is no need to go forward on my case because is time-consuming and costs money.

...... and is not always going to be alllowed by Upwork on low value projects anyway.

Someone saying "there is no need" and "not allowing" are two completely different matters. When it comes to low value disputes Upwork may try to find solutions that make arbitration unneccessary by offering some incentive for example. Not in any way the same as "not allowing".

In the above case, Upwork DID offer an incentive and the freelancer accepted. So mediation did what mediation is supposed to do: Find a solution both freelancer and client agreed to.

Will L wrote:
As good as it might feel to throw caution and net income to the wind and agree to pay $291 to force a client to go to arbitration

For small contracts freelancers would not do it to force the client into arbitration, quite the opposite! The goal would be to call the client's bluff and get the dispute ended with the escrow funds released to them and the arbitration fee returned.

wlyonsatl · ‎06-22-2021

Petra,

You have no way of knowing whether the Upwork mediator's words meant ""there is no need" or "not allowing".

So, since you have only had one dispute on a fixed rate project and I have had none, neither one of us can know for sure whether Upwork will allow a freelancer or client to insist on going to arbitration on a relatively small disputed amount.

I think I'll post an informal survey on this board to see what other freelancers' or clients' actual experience has been on going to arbitration on low value disputes.

petra_r · ‎06-22-2021

wrote:
Neither one of us can know for sure whether Upwork will allow a freelancer or client to insist on going to arbitration on a relatively small disputed amount.

Both of us are able to read the terms of service, where it says that client and freelancer have the right to ask for arbitration. Upwork can't violate their own ToS by denying rights their own ToS guarantee the parties.

You have no way of knowing whether the Upwork mediator's words meant ""there is no need" or "not allowing".

The OP of that thread LITERALLY said "no need" so yes, that would quite likely mean "no need"-

wlyonsatl · ‎06-22-2021

Petra,

**Edited for Community Guidelines**

In English, a person can say there is "no need" for something that is literally not needed. Or the words "no need" can be used when the speaker is trying to be subtle and actually means "we're not going to do that for reasons I see no reason to discuss with you" or even "I don't want to bother with that."

researchediting · ‎06-23-2021

Will L wrote:
Petra,

**Edited for Community Guidelines**

In English, a person can say there is "no need" for something that is literally not needed. Or the words "no need" can be used when the speaker is trying to be subtle and actually means "we're not going to do that for reasons I see no reason to discuss with you" or even "I don't want to bother with that."

*professional editor has entered the chat*
*rolls eyes*

*professional editor has left the chat*

wlyonsatl · ‎06-22-2021

Oops.

I have been told "surveys" are not allowed on this board, so we'll have to glean any real experience with arbitration by clients and freelancers who have actually participated in it, which is not information widely discussed on this board.

Oh, well.

sourceprouk · ‎06-23-2021

Oh yes, I once had a dispute where the Upwork mediator was trying to convince me to give in on a job I was 100% certain I was in the right. Again, in order to avoid Upwork paying their share of the fee and have to deal with the arbitration, they also took the easy way out and tried to persuade me to accept the loss of my fee and not go to arbitration. I do not know if they do it to other people.

feed_my_eyes · ‎06-23-2021

Federico D wrote:
Oh yes, I once had a dispute where the Upwork mediator was trying to convince me to give in on a job I was 100% certain I was in the right. Again, in order to avoid Upwork paying their share of the fee and have to deal with the arbitration, they also took the easy way out and tried to persuade me to accept the loss of my fee and not go to arbitration. I do not know if they do it to other people.

So did you actually go to arbitration and lost, or did you stop at dispute mediation?

wlyonsatl · ‎06-23-2021

Federico,

What was the approximate dollar amount in dispute?

Did you go to arbitration? If not, why not?

Thanks for sharing your personal experience on this.

sourceprouk · ‎06-24-2021

TBH, I do not wish to discuss my particular case here,

7974c902 · ‎02-20-2023

I have a small value project $250 which is heading to arbitration. The client said he would pay half price as he didn't like the answer I provided to a problem. Half price, or the threat was I would receive a poor review. I said fine, pay me full price, leave the bad review. He paid half, and left a libelous review. He Claimed.

I had promised a no questions asked refund. Entirely untrue. In writing, this was specifically addressed as not being offered.
I had promised a cheap, magical fix to his problem and not delivered. Untrue, prior to starting the contract, I had explained the fix would be complex, expensive, and take 6 weeks to even test.

So it's worth it for me to go to Arbitration, to have the libel addressed. People can have subjective opinions. But libel is not only illegal, it's immoral. It's worth it to me, for any price, to ensure a libelous account is not simply allowed to stay on my account, unaddressed.

Point is, people may have different reasons than just money for going to arbitration.

feed_my_eyes · ‎02-20-2023

Arbitration is about getting paid, not about settling a potential libel case. As far as I'm aware, even if you win in arbitration, the feedback review will remain on your profile (others who've gone through the process can correct me if I'm wrong).

Are you aware that you also confessed to a blatant terms of service violation in your feedback to the client? Cold contacting somebody off of Upwork instead of bidding on their project is grounds for having your account permanently banned. Also, threatening the client in your feedback looks extremely bad, and will not help you to win new clients; you've basically just shot yourself in the foot, there.

7974c902 · ‎02-20-2023

Thanks for your input Christine. Arbitration is about settling disputes and preventing legal action regarding a contract; the arbitrator's mandate covers more than just payment. Unless arbitration has changed since my Law degree days. It's possible I suppose. It's been a while.

Yes, you are right, the facts are that we both made contact outside of Upwork. It's regrettable. I suggested the client chose my bid, he asked for the answer to his problem by email, I said, I can't do that outside Upwork so yes, it's not ideal. I got a "don't do that again" warning and no further action.

The grounds for removal of the feedback are the breach of Upworks TOS. There was a demand for free services ($3k worth of work) and an implied threat of a bad review unless I accepted half-price. I think no matter what the outcome, these grounds still apply.

Plus, of course, I can just choose to refund, and the review comes off my profile.

tlsanders · ‎02-20-2023

I'm quite sure that even in your "law degree days," arbitration was bound by the scope of the contract providing for it.

Upwork won't be a party to the arbitration. So, while they certainly may remove the feedback if they feel that's required under their own terms, the arbitrator will have no authority to order them to do so.

7974c902 · ‎02-20-2023

Hey Tiffany. I agree with everything you have said. Cheers.

wlyonsatl · ‎02-20-2023

The arbitrator likely won't care what Upwork's rules and protocols are. They will care about whether and to what extent you fulfilled your agreement with the client and whether the client owes you money for the work you did. They won't care what channels you used for communication; they will want proof of what was said.

Upwork no longer provides funding to arrange arbitration for disputed amounts below $20,000, so Upwork should have no control on whether or not you can take your dispute to arbitration if your project involved less than that amount of pay.

See Section 7. of this Upwork document:

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

Please come back to this thread to let us know how this has been resolved. Thanks in advance!

7974c902 · ‎02-20-2023

I agree with all you've said. Cheers Will.

feed_my_eyes · ‎02-20-2023

Will L wrote:
Upwork no longer provides funding to arrange arbitration for disputed amounts below $20,000, so Upwork should have no control on whether or not you can take your dispute to arbitration if your project involved less than that amount of pay.

Upwork never did control whether or not a case went to arbitration. Not sure why you keep bringing this up, especially since there was no question in Richard's post about whether arbitration would be "allowed" or not; he said that he is headed to arbitration.

wlyonsatl · ‎02-20-2023

Yes, Christine, we were told by a poster on this board that an Upwork employee told him his dispute was not worth going to arbitration. Do you deny that information was on this board for everyone to see?

tlsanders · ‎02-20-2023

And it was 100% clear to everyone but you that the Upwork employee was expressing an opinion, perhaps attempting to pressure the freelancer, but per the TOS the freelancer had a right to go on to arbitration.

feed_my_eyes · ‎02-20-2023

I have no doubt that mediators try to persuade both parties not to go to arbitration - it's their job to resolve these situations - but that's not the same thing as not "allowing" cases to go to arbitration. The relevant section of Upwork's ToS was also posted in this thread, namely, "Freelancer and client each has the right to demand Arbitration."

Also, aren't you the same person who posted this comment about how you don't necessarily believe every claim that's made by disgruntled freelancers?

wlyonsatl · ‎02-20-2023

You're right, Christine.

I have clearly said I don't see any reason to believe everything I read from other freelancers. Including you.

Do you have personal experience with using arbitration on Upwork? If so, great! Please tell us about it.

If you don't have any such experience, then you have no specific reason to dis-believe another freelancer's experience.

And I believe this particular claim by another freelancer because it made no sense for Upwork to pay $291 for arbitration if Upwork's own income from the related transaction was below, possibly well below, that level.

Do you know how much gross value of a project is needed to generate $291 in fees for Upwork? I'm betting you can do the math. And, of course, now Upwork puts nothing toward arbitration related to projects worth less than $20,000, which I'd guess covers less than 5% of the total number of projects arranged on the Upwork platform. Paying zero dollars is much better than paying $291 for any rational business person.

feed_my_eyes · ‎02-20-2023

Will L wrote:
If you don't have any such experience, then you have no specific reason to dis-believe another freelancer's experience.

Sure, Will. I have no specific reason EXCEPT what's clearly written in Upwork's own ToS, whereas you choose to believe a freelancer who provided no documentation or evidence of exactly what he was told. That makes perfect sense. And have you really never read a post from a freelancer who went to arbitration over a project that was worth less than $291? I certainly have.

And yes, I can do math. It makes no economic sense to me that Upwork provides payment protection on hourly contracts either, but they do it anyway. And why would they say in their ToS that we have the right to demand arbitration, if this isn't true? Are you saying that Upwork is lying, or is it possible that the freelancer in this thread misunderstood what he was told?

wlyonsatl · ‎02-20-2023

Believe what you will, Christine, but I saw and see no reason to believe Upwork was keen to pay $291 for each arbitration. In fact, considering that Upwork now pays nothing at all for arbitrations for amounts less than $20,000 in value, I think it's reasonable to assume Upwork REALLY didn't like contributing to the cost of arbitration.

As to why Upwork offers much better payment protection on hourly projects that costs it millions of dollars each year, you'd have to ask them. But I'm glad they do - it's a big part of the reason I use Upwork.

Now, I'll leave the last post to you. I know you like to have the last word.

feed_my_eyes · ‎02-21-2023

Will L wrote:
Believe what you will, Christine, but I saw and see no reason to believe Upwork was keen to pay $291 for each arbitration.

I'm sure they were never "keen" to pay it, but for years and years they did it anyway. If some semblance of payment protection is an important part of their business model, they're evidently willing to take a loss (at least, they were prior to the last year or so, when these losses greatly increased).

And yes, I'll believe Upwork's ToS over the claims of one disgruntled freelancer. I don't base my opinion on anything related to Upwork just because other freelancers make complaints here.

Will L wrote:
Now, I'll leave the last post to you. I know you like to have the last word.

LOL - that would be nice, for a change. I don't recall it happening in any exchange that I've ever had with you. Let's see if you actually allow it this time.

abhimanyu-bind · ‎02-20-2023

"Furthermore, he is likely to give you a double whammy by damaging your rating, leaving you with bad feed-back."

-No public feedback option is available for both the parties for the jobs which remained unpaid or could not be completed for any reason, however, it may impact JSS slightly if the client leaves personal negative feedback which is the only option available in such cases.

For the filing dispute part,

I experienced it once when a client refused to pay the amount in escrow for the work done, I filed a dispute with Upwork, and they refunded the amount to the client and also paid me the same amount put in the escrow by mentioning one-time friendly gesture to save both parties from loss and bitter experience. That amount was $ 25.

tlsanders · ‎02-20-2023

"I filed a dispute with Upwork, and they refunded the amount to the client and also paid me the same amount put in the escrow by mentioning one-time friendly gesture to save both parties from loss and bitter experience. That amount was $ 25."

I believe that Upwork recently said they would no longer be offering these credits, but I can't find where I saw it.

prestonhunter · ‎02-20-2023

re: "I believe that Upwork recently said they would no longer be offering these credits, but I can't find where I saw it."

In the Forum I have seen Upwork users discuss this topic, suggesting that Upwork would no longer offer these credits because it no longer has a financial incentive to offer such credits.

When upwork payed $293 out of its own pocket to take a matter to arbitration, it made sense to offer a credit to avoid having to pay that money.

But now that Upwork NO LONGER pays money out of its own pocket to go to arbitration, and instead requires the client and freelancer to split the cost... Upwork shouldn't need to offer credits to encourage users to NOT go to arbitration.

I don't recall seeing upwork representatives officially say they won't be offering such credits. Maybe we're just recalling conjecture by Upwork users that Upwork would no longer do so.

tlsanders · ‎02-20-2023

Possibly. Now that you say this, I do think it was a freelancer who said it. I thought they were quoting, but perhaps it was just conjecture. Maybe a mod will wander by and clarify.

abhimanyu-bind · ‎02-21-2023

That was only a unique case and not a part of any policy of the upwork and also Upwork did it because the amount was lower.

7974c902 · ‎02-24-2023

OK, without wishing to detail everything that happened in my case.

a. I was offered full payment by Upwork. I assume the client was offered a full refund.
b. I decided no, I would prefer to wait until there was a position taken on whether the review given constituted a breach. The Client had advised that unless I did extra work for free as part of the contract, work for which I'd quoted $3k, they would only make half payment and leave no review. The veiled threat was, if I complained, there would be a bad review. So a breach for asking for free work, and using a bad review threat. Upwork acknowledged these issues but advised they weren't able to make a determination of a breach of their TOS. They only judge on clear-cut issues like, there is swearing in the review, etc. A bit disappointing quite frankly. Demanding $3k of work free or otherwise, you aren't paying, seems like a clear-cut case to me.
c. I wanted to go to arbitration, but in the end, I needed consensus agreement within my business management team to do that. I didn't get it. I couldn't go.
d. So even though I could have opted for full payment, with a dodgy review, I opted just to refund. So the libelous review will not show on my profile. It was only a $250 job, most of my Upwork jobs are many times this so it was never about the money only the principle.

The reality is, I have too much actual Upwork work to do, for clients that understand the value of my work to continue on principle to argue with someone whose site has lost 60% of traffic in 8 months, doesn't know how to fix it, but whose ego means they aren't prepared to listen to anyone's advice but their own.