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tagrendy
Community Member

Escrow protection is misleading

This post is to caution freelancers who are under the impression that escrow protection means they will get paid if they deliver the project.

If your client decides he wants a refund, the only option you will have is to go for arbitration - which costs a lot of money. It WON'T MATTER who is right or wrong, in fact Upwork replied stating "Upwork is not here to determine who is right or wrong". So all that matters is that you are able to pay for arbitration or you won't have any way to fight your case, period.
17 REPLIES 17
prestonhunter
Community Member

Tatev:

I'm sure that many experienced freelancers would say that your description of escrow protection leaves out some details or lacks nuance.

 

But essentially, I would say that you are correct in your key points

- Escrow does not GUARANTEE anything.

- Upwork does NOT make determinations about who is wrong or right in case there is a dispute

- Unscrupulous clients CAN INDEED file disputes and try to get away without paying for work

 

I find that Upwork's fixed-price/escrow system actually works quite well when a freelancer is working with a client who is honest and who understands and respects the fixed-price contract model.

 

But not all clients fall into that category.

 

Which is why I believe that having an understanding of the potential loopholes and pitfalls within the fixed-price contract model - an understanding that you clearly have - is so vitally important for freelancers.

 

For me, the solution to working with fixed-price contracts as they currently function (and not as we wish them to be) is to be proactive in protecting ourselves against potential disasters.

 

Which means that when I am working with a new client, with whom I have not previously had fixed-price contracts, then I start small. I don't work on anything that is more than a couple hours work of work, or around $100 to $150 maximum. I don't work on something that I'm not willing to walk away from if the client starts playing games.

 

By starting small on the first milestone or contract with a client, then I can submit the work. And if the client tries to get me to do out-of-scope work, or wants to file a refund just to get money back, then the project is small enough that I can give the client a clear choice: You may feel free to pay for the work and receive it, or you may have a full refund and I will keep the work. I'm always happy to have good examples of my work that I own, and which I can add to my portfolio.

 

If a client demonstrates that she can be trusted to release payment properly for fixed-price work, then I can agree to increasingly larger fixed-price contracts/milestones with the client.

I didn't know that before, I would always work on fixed price ( simply because the payment gets processed faster, 5 days versus 3 weeks on hourly contracts ), and I would always provide access to work when the funds were in Escrow thinking it's protected.

Definitely part of the blame is on me not doing research on exactly how "Escrow protection" works, but I thought other freelancers might be under false impression too, hence the post yo warn them.

From now on I'll never provide access to the files before the payment is released, and will take your working attitude to test on smaller projects with new clients as well.

Payment is faster on fixed-price contracts IF the client proactively releases it, otherwise it takes 14 days + the 5-day security hold. Payment on hourly contracts is available in 10-17 days (including the security hold) depending on when during the work week it is logged. 

 

In any case, the only protection that is more or less bullet-proof is an hourly contract where the FL uses the desktop time tracker precisely as recommended. Otherwise, there are various ways a client can successfully challenge payment--as there must be, because the world (including this platform) is rife with unscrupulous FLs as well as clients.

 

FLs working small-value contracts are most vulnerable because the non-negotiable, non-refundable cost of arbitration is $291 for each party (the FL, the client, and UW). OTOH, that means many clients won't fight to the end to secure a refund of a lower amount. In any case, it would be illegal for UW as an escrow agent to weigh on resolving a difference between FL and client. UW will facilitate mediation--the step before filing for arbitration. Sometimes, if the dollar amount is less than $291, it is cheaper for UW to issue a "courtesy payment" to the FL or a "courtesy refund" to the client, whichever is needed to make the whole thing go away. 

 

Feedback is another matter. We should not let ourselves be held hostage to it. Everybody gets dinged now and then, rightly or wrongly. 

petra_r
Community Member


Tatev G wrote:

From now on I'll never provide access to the files before the payment is released, and will take your working attitude to test on smaller projects with new clients as well.

You can not do that.

Clients HAVE to have the chance to examine the files before releasing Escrow. If you try to hold the client's files hostage, and the client reports you, you could risk your account.

 

tagrendy
Community Member

Yah, thanks for letting me know. I'll work on hourly instead.


Tatev G wrote:
Yah, thanks for letting me know. I'll work on hourly instead.

Clients can still request refunds and/or file disputes on hourly contracts.


Tatev G wrote:

From now on I'll never provide access to the files before the payment is released, and will take your working attitude to test on smaller projects with new clients as well.

Don't do that. It's totally against the way this platform works and you will get banned eventually. Use the escrow as intended. It's better.

 

 

-----------
"Where darkness shines like dazzling light"   —William Ashbless

Ah, didn't know, guess hourly contracts are the only way to go to be 100% safe.

Actually hourly contracts aren't 100%.

 

They're only 100% if you use the time tracker and do good work.

 

If you use manual time for contracts, and then the client decides they don't feel like paying you, Upwork will not get involved. Even if you send the client files.

 

How do I know this? The only time I've ever been scammed on this platform is in this manner. 

 

EDIT: No idea if Upwork has changed their policy on this, but I got scammed back in mid 2018. 

Yah, I'm slowly gathering that there is no way to be protected unless you have $300 prepared for every possible problem. For all the percentage increases off of freelancers earnings, and now paid bidding, you'd think there would be some service included, since in most cases 20 minutes of investigation can be enough to which party is being scammed.

Alexander,

 

No freelancer new to Upwork should add manual hours on an hourly contract and feel confident they will be paid for those hours..

 

It is completely irrelevant whether the client "agrees" to allow a freelancer to book manual hours - the client never has any obligation whatsover to every pay the freelancer for that time worked.

 

I have used manual hours occasionally, but only with clients I know and trust and in very specific circumstances.

 

 

mato0618
Community Member

Client definitely had the upper hand. It’s frustrating to know that a client is given all the power. If a client doesn’t want to pay right or wrong, the case is even if you do get your money in the end, the client wins by being able to leave a bad private review unchecked.

Learned that I need to be very specific about the terms before accepting a offer on a fixed contract,
lysis10
Community Member


Mattie O wrote:
Client definitely had the upper hand. It’s frustrating to know that a client is given all the power. If a client doesn’t want to pay right or wrong, the case is even if you do get your money in the end, the client wins by being able to leave a bad private review unchecked.

Learned that I need to be very specific about the terms before accepting a offer on a fixed contract,

It's probably frustrating when you don't know how to leverage the system, but the system in place gives a lot of power to freelancers actually. I think clients are at a disadvantage especially ones that don't want to lose their accounts. chargebacks are an issue but they lose their account when that happens. Aside from chargebacks, once you know how to work the system and see how it works, you'll see that freelancers have the advantage. 


Cairenn R wrote:
Clients only get the upper hand if the freelancer doesn't take control of their business and not give away their power.

Still, nothing is 100% here.

Or anywhere else.

But Upwork charges fees! It's an outrage. 


Mattie O wrote:
Client definitely had the upper hand. It’s frustrating to know that a client is given all the power. If a client doesn’t want to pay right or wrong, the case is even if you do get your money in the end, the client wins by being able to leave a bad private review unchecked.

Learned that I need to be very specific about the terms before accepting a offer on a fixed contract,

Clients aren't really given any power. Upwork simply does a bit less to protect freelancers than some freelancers expect or think it should.

 

I happen to agree that fixed price "protection" is completely useless to the freelancers who need it most, and wish that Upwork made it clearer that you have no real protection unless you're willing and able to pony up $291. That said, Upwork isn't GIVING the client any power--if you were working directly with a client off platform, you'd be in exactly the same position; the only way you could force the client to pay you would be to pay to file a lawsuit.

re: "if you were working directly with a client off platform, you'd be in exactly the same position; the only way you could force the client to pay you would be to pay to file a lawsuit."

 

...The filing of which would not actually force a client to do anything, and if it ran its course, whatever the outcome, it could cost more in legal fees than most Upwork contracts are worth.

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