Facing a huge problem due to chargeback

[#1]

Recently we have encountered a huge problem due to chargeback.

One of upwork client has worked with us and done one project with us.

A contract was closed and the client provided a 5-star rating to us. After that upwork has paid to us for that job but a few days after we got an email from upwork that the client has filled chargeback and the amount paid to you by upwork should be returned to us.

What's wrong we did here? Upwork keeps money in the review period and then they release payments to us then how it could possible that the client can fill chargeback after review period and all payments completed? We don't understand. Why we are paying 20% fees to upwork. Why they do not have any restrictions on clients? 

Its been more than 45 days and we still have an issue with chargeback and not resolved. Upwork simply trying to earn money anyhow because if he charges 20% of the fee on each contract then imagine how much money they wanted to earn from each freelancer without providing them proper security.

Totally disappointed with the upwork policy & terms.

Any help from the community much appreciated.

[#2]

Raul,

There really is no true payment protection for fixed price projects.

For the time being, payment protection on hourly projects is far better than for fixed price projects. Considering that Upwork reported a loss of nearly $ 3.6 million in 2020 for chargebacks and other fraudulent behavior, solving this sort of problem is no doubt a priority for Upwork management.

And don't let anyone tell you chargebacks are "rare". No freelancer with a mere couple hundred projects over the past few years can have any real idea based on their own clients' behavior what is "rare" for all freelancers, Considering there are at least 15,000 or so projects completed per week on Upwork, a few hundred projects is less than a drop in the bucket as a measure of what is "rare" client behavior.

[#3]

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Will L wrote:

And don't let anyone tell you chargebacks are "rare"

Nobody has told him that, and it would be irrelevant in his situation because no matter how rare they are, he's affected by one.

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Will L wrote:

Upwork reported a loss of nearly $ 3.6 million in 2020 for chargebacks and other fraudulent behavior

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That's all transaction losses, not just chargebacks and fraud. It also includes all losses due to clients simply not paying. Overall, all transaction losses (bad debt, declined payment methods, fraud and chargebacks) put together make up around 1% and as chargebacks are merely part of that, they're still rare in the overall scheme of things.

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Will L wrote:

No freelancer with a mere couple hundred projects over the past few years can have any real idea based on their own clients' behavior what is "rare" for all freelancers,

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Everyone can read the annual report and see the actual numbers. 

[#4]

But, Petra, those are the numbers for actual losses.

And if Upwork doesn't pay a freelancer because Upwork wasn't paid for fixed price projects, then Upwork doesn't report a loss. Only the freelancer loses money.

And no one knows how much that is annually or how "rare" those losses for freelancers are.

[#5]

And what about this

https://support.upwork.com/hc/en-us/articles/211062568-Upwork-Payment-Protection

[#6]

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Raul R wrote:
And what about this

https://support.upwork.com/hc/en-us/articles/211062568-Upwork-Payment-Protection

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It says  "See the Upwork Terms of Service and Fixed-Price Escrow Instructions for full terms and conditions"

Basically, if a chargeback can't be defended (and many can't be defended) and it's a fixed rate contract, or an hourly contract where the terms of the protection were not met, you lose the money.

[#7]

Hi and thanks to all for interest,

Yes I'm new to the platform and I'm still trying to get my head around this, hopefully we'll help others too.

I've done just 6 contracts so far, and those 2 contracts that were affected by chargeback accounting for 25% of my work/income.

The last contract out of these 2 was finished in the middle of may. We are talking here about 2.5 months.

Last payment from upwork to me that includes these contracts was made 2 months ago. I even spent the money.

Now I have pending approval for about 1400 usd from 2 clients, it really seems odd in terms of timing, because I will not be able to withdraw part of it(1200) due to this incident

There are 3 types of chargebacks:

1. Merchant error - don’t think is the case
2. Criminal fraud - again don’t think is the case because upwork verifies id and payment before
3. Friendly-fraud - As mentioned in upwork notification about this problem:
   “This reversal (chargeback) is a result of your client contacting their bank and asking them to reverse the payment for the following transaction(s):”

Taking into consideration that the client knew what he's doing, gave a review, changed back and forth discussions/modifications/tweaks/etc I have to stay chill and not worry too much.

Don’t know if upwork support can access my discussions with this client to use as proof that everything went ok and prove that he's a “dishonest buyer”.

Other things to mentions, also received from support:
“Please be informed that the client has the right to raise a chargeback, depending on the reason, up to 180 days after the payment date.”
It raises questions for the other 75% of my work so far.

I have to know for sure how I can prevent this and how it is differ to hourly work.

Why can’t a client request chargeback for hourly work? It’s also a card payment(chargeback occurs just on credit card payments?).

What should I do in the future? Please look at this:
https://support.upwork.com/hc/en-us/articles/211063748-Fixed-Price-Protection

If I do time tracking with the desktop app for fixed price contracts I’m fully covered?
“Track Fixed-Price Contracts
Fixed-Price contracts can be tracked using the Upwork Desktop App but they do not qualify for Hourly Protection, they only qualify for Fixed-Price Protection.

And I also have to find out how you can issue a chargeback and get away with it. Maybe I can order a 2000 usd TV on amazon and then issue a chargeback because it sounds very simple or make others work for free.
Please excuse all the nonsense, but I’m frustrated enough, I want to know what I can do:

• Provide git repo to see changes/pushes of code
• Conversations
• Etc
• Try to make myself justice?

I don’t even know the bank or location of the client(India). I didn't even know the veracity of the information.

Should I cut the client's access to github? Or if I still have access to the client’s server should I rollback the deploy(didn’t even try to access).
I’ll also wait for his response on the matter even though I don’t have hopes.

Again thanks for the support.
Regards

[#8]

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Raul R wrote:

I've done just 6 contracts so far, and those 2 contracts that were affected by chargeback accounting for 25% of my work/income.

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That is really unfortunate 😞 - Were they with the same client?

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Raul R wrote:

There are 3 types of chargebacks:

1. Merchant error - don’t think is the case
2. Criminal fraud - again don’t think is the case because upwork verifies id and payment before

2. Upwork only verify the client's payment method by verifying that the client has access to the payment method and that it can be charged. There is no routine ID verification.

The 2 main types of Chargeback are:

• "Unauthorised use" - the owner of the payment method claims (rightly or wrongly) that they did not authorise the payment method to be used for the transaction
• "Not received or faulty" - the owner of the payment method claims (rightly or wrongly) that they did not receive what they paid for or it was faulty / broken.

What you listed were 3 types of unjustified chargebacks.

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Should I cut the client's access to github? Or if I still have access to the client’s server should I rollback the deploy(didn’t even try to access).

Don't do anything like that right now. You'd make matters worse.

[#9]

Raul R.,

Generally speaking, if the client hasn't paid you for your work, you still own it until they do.

Are there any rules in the client's market or yours that prevent you from taking back what's yours?

[#10]

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Raul R wrote:

Don’t know if upwork support can access my discussions with this client to use as proof that everything went ok and prove that he's a “dishonest buyer”.

Other things to mentions, also received from support:
“Please be informed that the client has the right to raise a chargeback, depending on the reason, up to 180 days after the payment date.”
It raises questions for the other 75% of my work so far.

I have to know for sure how I can prevent this and how it is differ to hourly work.

Why can’t a client request chargeback for hourly work? It’s also a card payment(chargeback occurs just on credit card payments?).

What should I do in the future? Please look at this:
https://support.upwork.com/hc/en-us/articles/211063748-Fixed-Price-Protection

If I do time tracking with the desktop app for fixed price contracts I’m fully covered?
“Track Fixed-Price Contracts
Fixed-Price contracts can be tracked using the Upwork Desktop App but they do not qualify for Hourly Protection, they only qualify for Fixed-Price Protection.

---

Raising a chargeback is a violation of Upwork's terms of service. My understanding is that any client who does this will be banned from Upwork. Proving to Upwork that the client is dishonest wouldn't achieve anything extra.

Using the time tracker on a fixed price contract won't help. On fixed price the tracker is only for your own information. 

A client CAN raise a chargeback on an hourly job,  but on an hourly job Upwork will absorb the loss itself, PROVIDING that you meet all the requirements for hourly protection. 

All you can do to protect yourself is limit fixed price contracts to small jobs, avoid them altogether or choose your clients more carefully and then hope for the best. Chances are it won't happen to you again. 

[#11]

This thread, and others like it, have caused me some concern recently. Are chargeback requests happening more often? I've never faced one myself, but does this apparent trend imply that some clients are increasingly using them to game the system and effectively get work for free?

As far as Richard's advice goes, "All you can do to protect yourself is limit fixed price contracts to small jobs, avoid them altogether or choose your clients more carefully and then hope for the best."

I would very much like to avoid fixed price contracts, but many clients insist on them (sometimes, even for larger jobs). The argument, of course, is always, "I need to know how much this is going to cost." Yes, but I don't know how long this is going to take. Any advice on how to win clients over to an hourly contract?

[#12]

This is extremely, terribly unfortunate. I did 100+ contracts with about 100 clients and i never had a single chargeback. You should really get more picky as to who you work with. Vet your clients.

A good rule of thumb to tell if "Upwork is being unfair on me by doing X" is asking yourself what would happen in "offline" business world if same thing happened. So i can tell: some vendor who has 25% chargeback rate, almost inevitably loses access to the billing and will have a hard time signing with anyone else. There are literally shady billing providers who call themselves "fraud billing" outright, who'd accept clients with this sort of a chargeback rate...

[#13]

>“Please be informed that the client has the right to raise a chargeback, depending on the reason, up to 180 days after the payment date.”

wait wait, aren't you confusing chargeback with a refund? as per Upwork terms of service, client has NO right to do a chargeback (he has, sometimes, technical abilility to do it, by calling their bank, but this breaks Upwork terms of service and automatically kicks out client from Upwork).

[#14]

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Alexander N wrote:

>“Please be informed that the client has the right to raise a chargeback, depending on the reason, up to 180 days after the payment date.”

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Yes... yes

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Alexander N wrote:

wait wait, aren't you confusing chargeback with a refund? as per Upwork terms of service, client has NO right to do a chargeback (he has, sometimes, technical abilility to do it, by calling their bank, but this breaks Upwork terms of service and automatically kicks out client from Upwork).

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Not refund, chargeback

And if the client is kicked out what? Does it please the freelancer? Do you think the client walks emtyhanded? Who do you think needs the most the UpWork profile, the freelancer or the client. Clients comme and go.. so

[#15]

How did your issue resolve?

[#16]

Hi Anirudh,

Thank you for your message. I see that you are already communicating with the relevant team via a support ticket. Please don't hesitate to follow up with them on the same support ticket if you have additional questions regarding your concern.

Thank you,

Pradeep

[#17]

When you're facing chargebacks, Upwork will not protect you. Even if you're doing hourly with the time tracker the most Upwork would protect is $2,500, so if the chargeback is over this amount, you won't be protected. The only thing is can do at this point is take the client to court to dispute the chargeback. 

[#18]

Actually, you can't dispute the chargeback, because the payment wasn't made to you. Upwork can dispute the chargeback. 

You could, perhaps, sue the client for fraud. If the work was web design or content writing or something along those lines, you could issue a takedown notice and perhaps sue for copyright infringement. But, the electronic payment was made to Upwork and the chargeback dispute process is available only to the recipient. 

[#19]

Seems Upwork just Shadow Bans User Accounts. First, they cannot protect against fixed-priced contracts. On top of it, my acc is shadowbanned for 1 year. Cant upgrade credits, no new proposals. An old scammer client gives chargeback, Upwork bans their ACC and shadow bans my acc. 1 year over no resolution. Time to quit Upwork?