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Happy client 'reversed' payment 2 months after releasing escrow.

Hi, I'm posting this here in the hopes of getting an answer - I have an open ticket in Upworks help system, but no-one seems to be responding to my questions, despite there apparently being 5 people CC'd in on it.

 

The situation is this:

 

1. I took on a job on a job on Upwork, and the client put funds into Escrow - as far as I'm aware this is to protect both parties (at their end by knowing their money is held by in neutral third party, and at my end by showing that the client actually has money)

 

2. I completed the job and the escrow payments are released. The client provides a 5 star rating for his job, a bonus, and a glowing review. He is very happy.

 

3. 2 months after the escrow payment was released, somehow the client 'reverses' his escrow payment, without giving any kind of reason that I know of. I got a message from Upwork saying they have blocked my ability to withdraw funds, and is seeking to recover money from me by taking the funds I've earnt from other clients.

 

So my 2 questions are:

 

1. Is this the expected behaviour of Upworks escrow system?

 

2. I'm struggling to understand how someone can 'reverse' a payment after 2 months? Are you able to explain the mechanics of that, as I don't know of any payment method that supports this?

 

I hope you can see why I'm concerned, as the main reason I do work through services like Upwork is the payment security provided by your escrow services. If the above is correct then the escrow system actually affords me no security whatsoever! And even more worrying is the fact that it could happen to me months after a job is complete - so any of my clients I have done work for could arbitrarily decide to take their money back?

 

I'm unsure of how to proceed at this point as I can't possibly run a business through upwork if they dont have a working escrow system!

 

kind regards,

Chris

 

 

ACCEPTED SOLUTION
kochubei_valeria
Community Manager
Community Manager

Hi Chris,

 

I see that our representative has explained the issue to you in a ticket. The team is also communicating with the client to resolve the issue. They will update you via the same open ticket since we can't share the details here in the Community.

 

Thank you for your patience.

~ Valeria
Upwork

View solution in original post

53 REPLIES 53
screeler
Member

This is alarming actually. 

 

I hope a moderator can explain this to you and not let this go for too long. 

Yeah, it is pretty scary. Either stolen CC or he disputed with his CC I'm guessing. It's a scary thing and one reason I prefer small jobs on here. 

 

Someone on Elance once complained that a client reversed payment like a year later. Pretty terrible.

Sounds like a credit card reversal as the others said.

 

As for protection....NO you have no protection with fixed price, as you now well know.

 

That's one reason so many Odesk people did hourly work. With memos and keyboard activity you will be paid.

 

Fixed price ... not so much.

Yes, unfortunately there is no payment protection for fixed price jobs, despite what Upwork agents may say. Please read the terms of service to learn more about it. Only hourly jobs are covered up to $2500.

 

 

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

This is really absurd.  Also, does this not directly violate the below provision of the UW agreement?  He doesn't need payment protection because payment has been made.  This is about a refund of sorts that again would seem to be in direct opposition to the below (bolding mine):

 

6.6 No Return of Funds

Client acknowledges and agrees that EEC will charge Client’s designated Payment Method for the Freelancer Fees: (a) for Fixed-Price Contracts, upon Client’s acceptance of the Freelancer Services, and (b) for Hourly Contracts or Freelancer Services using Upwork Payroll, on the Monday after the week in which work was performed. Therefore, and in consideration of the Site Services provided by Upwork and the Escrow Services provided by EEC, Client agrees that once EEC charges Client’s designated Payment Method for the Freelancer Fees as provided in this Agreement, the charge is non-refundable, except as otherwise required by applicable law. Client also acknowledges and agrees that this Agreement provides a dispute resolution process as a way for Client resolve disputes. To the extent permitted by applicable law, Client therefore agrees not to ask its credit card company, bank, or other Payment Method provider to charge back any Freelancer Fees or other Fees charged pursuant to this Agreement for any reason. A chargeback in breach of the foregoing obligation is a material breach of this Agreement. If Client initiates a chargeback in violation of this Agreement, Client agrees that Upwork or EEC may dispute or appeal the chargeback and institute collection action against Client.

Thats what I find confusing however as Upwork clearly states that they use Escrow protection when you apply for fixed price jobs:

 

  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.

 

They quite clear say several times in that statement that fixed price jobs are covered by Escrow protection, when milestone are funded. Escrow protection by definition is a service that provides payment protection for both parties. Thats the whole point - if Upworks Escrow protection doesn't actually protect one of the 2 parties from the very thing that has just happened to me, then it isn't an Escrow service and shouldnt be advertised as such.

 

kochubei_valeria
Community Manager
Community Manager

Hi Chris,

 

I see that our representative has explained the issue to you in a ticket. The team is also communicating with the client to resolve the issue. They will update you via the same open ticket since we can't share the details here in the Community.

 

Thank you for your patience.

~ Valeria
Upwork

Valeria, 

 

Is it rude if I said you actually do need to share details in the community, because what Chris is mentioning here is very alarming, and nobody wants to fall victim of the same thing?

 

I think the community deserves an explanation of what's going on, don't you agree? 

 

Best regards, 

Wassim

Hi Valeria,

 

Thanks for getting in touch, the representative has explained the issue, as you have here, only so far as in that Upwork is contacting the client, and waiting to hear back. That is totally fine, and I understand there must be some process that needs to be gone through, and that its private information not for here.

 

However, thats not my point in this thread. Around 30 hours or so ago I asked the 2 questions above, which are general questions about the expected behaviour of Upworks Escrow system, when a situation like this occurs. I received no response. About 4-5 hours ago I followed up, and asked if my questions couldnt be answered to be told where they might be answered. Still no response.

 

I wonder then if you might be able to help me with my questions above? I'm not looking to discuss this specific issue, but would like some clarity around how the Escrow service functions that lets my specific issue be possible at all. No one should be able to reverse money out of a functional Escrow system without both parties being involved in some kind of Dispute mechanism.

Hi Chris,

 

I know this is an old post, but I was alarmed that this happened. I'm wondering if your complaint was resolved.

Its happened same with me after 6 months upwork is asking for reverse payment and suspended my withdraw option for my account.

 

 

and my project amount was reasonable (not small amount so we can forgot that) so how to deal now and how to work with upwork now?

 

They have informed via upwork ticket support and I didn't got any help from ticket support, I hope I will get some help or solution from here.

 

Thanks

kat303
Member

Upwork’s escrow system is protection, but only up to a certain point. It’s not guaranteed and it’s not fool proof. All a client has to do is to say to the bank/credit card company that their card was unauthorized for that transaction.  The bank goes after “Upwork” to replace the amount in question. Upwork out of their accounts, gives the client the “disputed charges.” And now Upwork will go after the contractor to replace what they had to give back to the client.  It will actually Never really be known, if after Upwork gets reimbursed, whether they make a half ditch effort to pursue this matter further.  They can say they do…. but….

 

Of course, a client can’t do this for every job. Or keep this up on a regular basis. But there’s nothing stopping them, if it’s a one time deal/job. From pulling this off. The only money that Upwork is actually out of, is the fees (10%)

It does sound like a credit card dispute, which really still should be covered under the payment protection system.

 

Off-Upwork war story:

 

I once owned a restaurant.  I served about a half dozen business lunches over the span of a few weeks to a local realtor, who worked upstairs in my building. He and his guests always ordered our more expensive entrees and our best glasses of white wine. He paid - and tipped well - with a credit card.

 

A couple months later, all of his lunches were charged back. Whenever I visited his office about it, he was unavailable. Finally, I cornered him and he blamed it on his accountant. He said the accountant must not have recognized the charges. It was all incredibly lame, but it happened.  

 

I do hope that this client did not intentionally try to defraud you, Chris.  Perhaps his accountant had other troubles with Upwork, they disputed all recent charges, and you got caught in the crossfire. Still, this should never happen, and thanks for bringing it to all of our attention.

jsutherland
Member

**Edited**

 

There really is no guarantee you will be paid when it is fixed price. End of story.

 

And if a client disputes your payment you can be guaranteed you will not receive the total sum.

 

I know, it happened to me. Client tried to shaft me and did so in the end. Customer Service "ENCOURAGED" me to take less money.

 

Arbitration is $299. 

 

Why do you think so many ODESK people did and still do, only hourly work?

iaabraham
Member

This is truly alarming. It never occurred to me that clients could do this after the money has been released. And I didn't know that Upwork had the right to just limit your withrawals and take money away from you in order to reimburse themselves. 

 

If this is the case, is there any point in doing fixed-price jobs on Upwork? And can't similar problems arise with hourly contracts? (I know Upwork "guarantees" payment for hourly jobs, but what if they just decide to change their minds about this?)

 

@ Chris - I'm wondering, though, have you tried to contact your client for an explanation of this and, if so, what did he say?


@Isabelle Anne A wrote:

 

If this is the case, is there any point in doing fixed-price jobs on Upwork? And can't similar problems arise with hourly contracts? (I know Upwork "guarantees" payment for hourly jobs, but what if they just decide to change their minds about this?)

 


 From the Terms of Service:

 

Upwork ONLY provides Payment Protection to Freelancers working on Hourly Contracts.

 

Fixed price you are out of luck.

screeler
Member

why was my post obliterated? the blanks weren't bad words at all!!! 

kochubei_valeria
Community Manager
Community Manager

Hi Chris and others,

 

Please, refer to article 6.4 of the User Agreement for more information about disbursements of funds from Escrow to the freelancer including in case of a chargeback. 

 

We understand your frustration and our team will continue communicating with the client to try and work this problem out.

~ Valeria
Upwork

6.4 gives us this:

 

or if we have supplied our services in accordance with this Agreement yet we receive any chargeback from the Payment Method used by you, or used by your Client if you are a Freelancer. You agree that we have the right to obtain such reimbursement by instructing EEC to (and EEC will have the right to) charge an applicable Escrow Account, and any other accounts you hold with us, offsetting any amounts determined to be owing, deducting amounts from future payments or withdrawals, charging your Payment Method, or obtaining reimbursement from you by any other lawful means.

 

6.6 (as mentioned in my earlier post) gives us this:

 

Client therefore agrees not to ask its credit card company, bank, or other Payment Method provider to charge back any Freelancer Fees or other Fees charged pursuant to this Agreement for any reason. A chargeback in breach of the foregoing obligation is a material breach of this Agreement. If Client initiates a chargeback in violation of this Agreement, Client agrees that Upwork or EEC may dispute or appeal the chargeback and institute collection action against Client.

 

So if we assume that a charge back is what happened here, UW can take back the money from you, but is obligated to dispute the charge back and take the client to collections.  However, as the freelancer you are on the side lines hoping that UW will take the time to actually do that.  In the mean time UW got their money back so incentive isn't at an all-time high.  Question, what happens to the 10%?  Overall, client gets their money and the work.  UW get reimbursed.  The Freelancer gets.....fill in your own word here.

Question, what happens to the 10%?

 

It probably depends. Big businesses take a hit depending on how much is involved. I'm just assuming that if the job is small, say a few hundred dollars or even less Upwork will take the 10% loss and not really bother to pursue it. they make that up by the amount of clients/contractors, cost of buying bids, membership costs, fees (Elance used to be 8 (and something%) now UW is 10%. Fees are increased which makes up in the long run for getting payment back, (in a way.)

 

A moderator may come on here and say they agressively pursue all clients for any chargebacks that incur, no matter how big or small that chargeback may be, but unless we have actual knowledge of the innerworkings and are actually involved in each pursue, there's really no way of knowing.

wronglane
Member

This sounds scary. So basically I need to tread safe with any large Fixed price project incase a client decides to file a chargeback and in turn jeopardize my account.

 

Does this also happen if client puts money in Escrow using his Paypal account?

 

Even if the client files a chargeback Upwork should take remedial action instead of immediately putting the onus and loss on the Freelancer as this is not a normal exchange between a buyer and a seller.  It seems that they are just shifting all loss to the Freelancer immediately and then going after the client, which may result in less incentive if Freelancer has funds from other projects and Upwork is already reimbursed.

 

If we put our faith in Upwork by taking new or repeat projects here then Upwork should provide for a safety net during and after the project. 

 

This is a huge red flag before taking up large projects on Upwork.

 

Thank you for making me aware of this. I need to educate myself more on this.

 

If it's any reassurance, in the majority of cases, chargebacks are extremely difficult to obtain, at least in New York banks and other banks in this country. 

 

I've tried in the past for services that I wasn't happy with, and it was such a major hassle, I gave up. You can't just walk into a bank and request a chargeback, and then it happens. There are all sorts of documents you need to provide for a chargeback to be agreed upon by a bank, including proof that services weren't delivered as promised. And even after that, my bank said they'd have to contact the other party before agreeing to it.  

 

I believe the only cases where chargebacks happen quickly are in the event of fraudulent credit cards, or something else wrong with the credit card. 

 

In all other cases, it's far from easy to get a chargeback issued.

 

Maybe this will offer some reassurance to people who are now understandably freaking out, believing all a client has to do is ask their bank or credit card company for a chargeback and then it instantly happens, when in reality, it's a much more difficult and complex process.

 

Think about it.  If it was so easy to immediately get our money back after purchasing a service or product, most consumers would be utilizing chargebacks on a daily basis, considering all the unhappy transactions that probably occur hourly around the world. That's why obtaining a chargeback is an extremely difficult process, one that most people don't consider worth the bother.

It depends on the card.

 

Some quite rightly make you jump through lots of hoops, some (Amex for example) are more likely to charge back and argue later.

 

Of course there is always the possibility that it wasn't a client instigated chargeback, but a fraud chargeback, where the "client" was using a card they had no legal right to use. Stolen / cloned / hacked / borrowed without consent etc for example

sandyc0256
Member

I have a similar issue with hourly. A happy client paid me each week hourly for over a year. Two month after job ended he disputed through his credit card company  several weeks of payments he made to me.. Elance contacted me saying they would dispute for me for now but ultimatley his bank would be the one to decide if the charges would be reversed onto my account! There is no Elance/Upwork protection even for hourly!


There is no Elance/Upwork protection even for hourly!

 No idea how it worked on Elance but on Upwork you WOULD be protected if the hours were logged with the tracker, (not manually added) and had proper activity and memos.

 

In that case Upwork would swallow the loss and not pass it on to you.

vladag
Community Manager
Community Manager

Hi Sandy,

 

I'm not familiar with your case but can confirm that if Elance's Work View Payment Protection was used and the hours were logged in properly, those hours would be covered as noted in this Help article

Untitled


@Sandy C wrote:

I have a similar issue with hourly. A happy client paid me each week hourly for over a year. Two month after job ended he disputed through his credit card company  several weeks of payments he made to me.. Elance contacted me saying they would dispute for me for now but ultimatley his bank would be the one to decide if the charges would be reversed onto my account! There is no Elance/Upwork protection even for hourly!


Sandy:

 

The Upwork payment guarantee for hourly work should not be impacted by client fraud or chargebacks. We pay Upwork a commission commensurate with the total risk of the client-freelancer relationship: 20% for the riskiest phase, then 10%, then 5%. Upwork manages commissions charged to their risk profile. They will occasionally incur unexpected losses due to client fraud. They build the reserve allowance for future losses into their balance sheet.

 

Certainly, a credit card chargeback should trigger a work diary review, but if the proper memos and screenshots are present, this should quickly be resolved in the freelancer's favor, irrespective of whether the client has defrauded Upwork for the funds.

 

Please update this post when you have received a final disposition from Upwork.

 

Thanks! -Alan

 

 

 

lomen_jan
Member

As I see, credit card reversal can possibly doom your earnings fixed price or hourly charged. Even if it rarely occurs, for a place where some job posts are unethical practice, seedy or straight up frauds - it doesn't surprise me much.  

I feel that Upwork can easily eliminate some of that by simply verifying clients - no funny names, real photos policy and payment verification before the job is posted. 

 

I am sorry to hear that someone can reverse the payment after you spent that money. After it exchanges hands, the reversal is solely Upwork problem, but if job was "suspicious" like no track records (interview/chatlogs, no file exchange and similar...) it could lead to freelancer, too. I mean, perfect way to laundry some money; hire a fictitious freelancer on Upwork. 

I would bet that it's a higher chance of a stolen credit card when this stuff happens than some guy deciding to reverse charges 2 months down the line. I'm sure it happens, but I can't see it being the typical scenario vs stolen cc.


@Jennifer M wrote:

I would bet that it's a higher chance of a stolen credit card when this stuff happens than some guy deciding to reverse charges 2 months down the line. I'm sure it happens, but I can't see it being the typical scenario vs stolen cc.


AS far as I know, people tend to alarm their banks and credit card companies when card is stolen. You can have with stolen card some quick purchase, but hardly you can hire a freelancer. I mean, it would happen before 2 months period to get mechanisms started. I feel that is just weird dickish client move, to slip out of some expenses. People do a lot of that kind of buffoonery. 

Stilll, It could be case of stolen card if card owner doesn't monitor it. Nowadays when you get notified with every purchase directly to your inbox, it would be noticed. unless card owner is usig same card for **Edited for Community Guidelines**


@Jan L wrote:

AS far as I know, people tend to alarm their banks and credit card companies when card is stolen. You can have with stolen card some quick purchase, but hardly you can hire a freelancer. I mean, it would happen before 2 months period to get mechanisms started. I feel that is just weird dickish client move, to slip out of some expenses. People do a lot of that kind of buffoonery. 

Stilll, It could be case of stolen card if card owner doesn't monitor it. Nowadays when you get notified with every purchase directly to your inbox, it would be noticed. unless card owner is usig same card for **Edited for Community Guidelines**


 

Not necessarily. People who don't use their credit cards much but have a high balance don't notice charges. Lots of people don't check charges on their account. Just pay it. I'm one of them. LOL

 

I never would have guess people stole PayPal accounts to buy content of all things, but one of the sites where I sell my content had the problem and had to put security in place. PayPal sends a receipt but so many people don't even check email that often.

I wish you could read that edited part, cuase it talks about discretion in some "problematic yet somewhere legal" type of business.  Their companies usually are named like regular ones. By quick glance, someone who used those "services" can easly overlook Upwork expenses. Especially if they are high balance ones.  I just wonder how come it is 2 months later. This seems waaay to odd. 

gnakeur
Member

I think those cases are quite rare and they are related primarily to stolen cards or unauthorized use etc. This should not be that much and upwork can have its budget for this to make our work fully protected.

They can also introduce some fees for protection, say 1% from payment(if freelancer agrees) - I mean something like insurance service on upwork. I think those cases are so rare that collection of 1%-s from freelancers that are willing to protect their money will cover those cases.


@Giorgi N wrote:

They can also introduce some fees for protection, say 1% from payment(if freelancer agrees) - I mean something like insurance service on upwork. I think those cases are so rare that collection of 1%-s from freelancers that are willing to protect their money will cover those cases.


 You can not insure for fraud. Plus, this would open the door for great fraud opportunities. Bad idea.


@Petra R wrote:

 You can not insure for fraud. Plus, this would open the door for great fraud opportunities. Bad idea.


 Why not? For instance, in my country banks are giving us this service in case our cards are stolen and unauthorized transactions are registered. I realise this may be a bad idea though.

lomen_jan
Member

At the end of the day, I don't see the point of asking freelancer for money reversal after the serice is done and pyment released after the security period (both review and this +6 day when Upwork holds them - I guess for this scenarios). Upwork after it can pause the contract if it's still open and that is about it. I, as a freelancer am the one who can ask client what is happenning, cause Customer service is not the one who would provide me with specifics of said action. That being said, after job done, contract closed and feedback exchanged, Upwork has freeze my money that made with other clients. That reversal is now Upwrok problem and they took cut from freelancers money to handle that situation.  I seriously believe, that someone should get sacked for that message sent to Chris because it is wrong on so many levels; 

 

Freelancers have limited screening infos on potential clients. Escrow is our only guarantee. After the job is done, payment released & feedback exchanged - that is not our client anymore (until our next contract). 

 

After client's review, Upwork holds our money, I guess for that security reason.  2 months are super late to complaint pity party held by a carding company/bannk over client's spending spree.  I know that you now doing your best to control the damage.

 

It actually opens a Pandora's box for new way of doing frauds and it is utterly disturbing.

 

Upwork should have policy regarding this reversals as most of freelancers, and I dare if not all, are in service based fields. We cannot resell our wasted time and effort spent on servicing client's needs. 

 

For that cut that Upwork takes from our money, we all expect some level professionalism and correctness regrading this kind of situation. As fas as I know you can secretly see all our on-platform correspondence and take a stance on carding companies asking for reversals. 

 

I am not negative towards Upwork, but I feel worried. 

 

 

It is exactly the same if you take a payment via PayPal and the buyer later files a chargeback through the card used to fund the PayPal transaction. PayPal will take the money off you the same way.

 

So does eBay, so does everything....


@Petra R wrote:

It is exactly the same if you take a payment via PayPal and the buyer later files a chargeback through the card used to fund the PayPal transaction. PayPal will take the money off you the same way.

 

So does eBay, so does everything....


regarding paypal invoices - we are on our own there.

And this scenario should be handled from Upwork legal team. Here is not ongoing contract - it is done job and output consumed. I can't get back what I did, because I did to fit someone else. That's why we have escrow and holding periods and disputes. I guess clients should know what that is too. 

What happens if you have no money on account? I mean - it is 2 months after the completition. 

I was wondering the same, what if I withdraw my funds before that? Also why Upwork is than charging me 20% on fixed payments if they can not protect me? This is really scary, open to frauds easily. Also I do not acre what PayPal does they are not charging me 20% for their services.
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