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Escrow Protection Shortcomings Warning

The current pop-up when submitting a proposal for a fixed-price job reads as below:


"You're submitting for a fixed-price project. While the majority of Upwork projects are completed successfully, please keep a few things in mind:

  1. Escrow Protection is in place for fixed-price jobs

    Before you start the project, you and the client must agree to requirements, a budget and milestones. Upwork charges the client at the beginning of the project, and the money for a milestone is deposited in escrow.

  2. Escrow funded payments are released when the client approves work

    When milestones are completed, the client can either approve work and release payment or request modifications to the work. Clients can also request that you approve the return of funds held in escrow.

  3. Upwork offers mediation services

    If you do the work and the client refuses to pay, Upwork can help mediate the dispute.

Please choose fixed-price jobs carefully. Only funds deposited for an active milestone are covered by Escrow Protection."


I think it would be a good idea to also include here a fourth point warning freelancers that, should the client be suspended from Upwork, Upwork cannot guarantee that the freelancer will be paid, even if all milestones were funded, work was completed and weeks have gone by. 


Essentially, Escrow "Protection" is only available for when clients play by the rules. Clients are suspended for a variety of reasons, and there appear to be many such situations where the funds intended for the freelancer are refunded to the client with no assistance from Upwork to the freelancer. Freelancers should be warned of this possibility so that they may more carefully vet their clients before beginning work.


This is interesting and I am not sure why if UpWork suspends a client that this would result in the client getting the favor of money back.  Is this not rewarding bad behavior?


The above notwithstanding, it is also a good idea to properly size milestones.  Smaller milestones mean less risk.  Yes, it may be nice to see that $1000 milestone payment waiting, but if it is possible to break it into 4 milestones of $250 you are better off.  I get that it doesn't always work out that way in terms of what you can deliver, but it's worth taking the time to structure it rather than putting yourself a higher risk with a large lump sum.

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