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Escrow protection is misleading

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Active Member
Tatevik G Member Since: Dec 23, 2012
1 of 19
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.
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Community Guru
Preston H Member Since: Nov 24, 2014
2 of 19

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.

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Active Member
Tatevik G Member Since: Dec 23, 2012
3 of 19
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.
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Community Guru
Phyllis G Member Since: Sep 8, 2016
4 of 19

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. 

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Community Guru
Petra R Member Since: Aug 3, 2011
5 of 19

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.

 

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Active Member
Tatevik G Member Since: Dec 23, 2012
6 of 19
Yah, thanks for letting me know. I'll work on hourly instead.
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Community Guru
Christine A Member Since: May 4, 2016
7 of 19

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.

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Community Guru
Rene K Member Since: Jul 10, 2014
8 of 19

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
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Active Member
Tatevik G Member Since: Dec 23, 2012
9 of 19
Ah, didn't know, guess hourly contracts are the only way to go to be 100% safe.
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Community Leader
Alexander B Member Since: Mar 30, 2017
10 of 19

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. 

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