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haideriqbal707
Community Member

No Protection of Fixed Price Contracts

I just wanted to share my recent experience so anyone can learn out there.

 

While on the Interview, the client (New to Upwork) asked to make payments out of Upwork, which I refused. Then he shared the requirements for his task and said that he wants me to work on a little Free Trial before getting to the full task. I asked him for activating the first milestone of $10, as the trial he wanted was worth it.

He activated the first Milestone, I worked on that trial according to his requirements, I sent the file via Submit Button, He Copied the file, Cancelled the Contract, Sent an Escrow Refund Request. 

I sent him messages asking about the problems in the work, he never responded because the work was good and exactly what he asked for.

Lead Generation is just like Maths, it's either up to the Criteria or NOT. There's No Design or something Creative involved so you can't say "I don't like it".

I searched for the matter herein community, as I didn't want to pay the refund. So technically there are two options in such case:

 

1) Pay the Refund

2) Refuse to Pay Refund and open a Dispute

 

A dispute is a Nightmare for Freelancers and most of the Freelancers take it the wrong way, they think that it's something like Upwork Judges the Facts and Conversation that who's right and who's wrong, but actually it's totally different. Dispute resolvers just motivate you to resolve the matter with each other. In such cases like mine, there's No Output, as I want the money which I worked for, and the Client simply has thousands of junky reasons to NOT TO PAY. So let's discuss the Next Phase...

 

If the Dispute resolve system doesn't work, you'll be forwarded to the Arbitration phase.

Arbitration is provided by the American Arbitration Association (AAA), a neutral third-party arbitration provider. The fee for arbitration is $875 and is split three ways, with the client, the freelancer and Upwork each paying one-third of the fee. AAA handles the arbitration process in full. The process may take up to 30 days before the arbitrator provides the decision.

 

Facts of Arbitration:

  • If one party pays for arbitration and the other does not, the dispute is found in the paying party’s favor. Escrow is released to the paying party and the arbitration fees are returned.
  • Arbitration fees are non-refundable once the case is filed with AAA.
  • Upwork carries out arbitration rulings within 2 business days of receipt

 

So Upwork really thinks that I'll pay $292 for Arbitration to get my $10?

 

Only those are going for Arbitration who have more than $292 Disputed Money.

 

I'd like the Community Gurus and my other seniors to leave their feedbacks on this.

 

37 REPLIES 37
feed_my_eyes
Community Member

I'm sorry that this happened to you, but your protection on Upwork is that at least they do have a dispute process and a mediation process in which they contribute 1/3 of the fee. It's expensive because that's what arbitration costs - it can't be done for $10. So how do you think that problems like yours ought to be solved? Should Upwork pay out of their own pockets every time a freelancer decides to accept a low-paying job from a bad client?

 

Christine A wrote:

Should Upwork pay out of their own pockets every time a freelancer decides to accept a low-paying job from a bad client?

 


Thanks for your response, in my opinion, Upwork should handle the disputes like Judges, based on the facts and conversations, even if they've to hire some Legals. And as I said, the client was New to Upwork, who knows if a Client is Bad or Good with No History on the Platform. I previously had those newbie clients, but this was the first time the client turns out to be the bad one.


Haider I wrote:

 


Thanks for your response, in my opinion, Upwork should handle the disputes like Judges, based on the facts and conversations, even if they've to hire some Legals. 


No, they should not. My fees would go towards paying for this kind of thing, and I do NOT want Upwork to take more of my money so that they can pay legal experts to settle $10 disputes.

 


Christine A wrote:

No, they should not. My fees would go towards paying for this kind of thing, and I do NOT want Upwork to take more of my money so that they can pay legal experts to settle $10 disputes.

 


Well Said 🙂 You're right. Kindly skip this $10. Let's say it was $250 then what?


Haider I wrote:

 


Thanks for your response, in my opinion, Upwork should handle the disputes like Judges, based on the facts and conversations, even if they've to hire some Legals. 


They can't do that, and I agree with the others: I would rather my fees did not have to be increased to pay thousands for lawyers to argue over pathetic $ 10 contracts between clients and freelancers who don't have the business-skills to sort their own *bleep* out.

 

"Hire legals" over a $ 10 contract? Or even a $ 250 one? Do you have even the faintest clue how much money it takes to get "a legal" to even look at your pathetic $ 10 contract?

 

Do you want fees to treble? Learn to choose your clients wisely and to manage your contracts professionally, then you likely won't need "legals" to fix $ 10 worth of contract-gone-wrong.

 

The whole mess would have been avoided had you had the common sense to walk away from this when it was clear that it would not end well: Before it even started.


Why do people need so much protection from their own poor judgment? And more to the point, why do they expect me (through my fees) to pay for the consequences?


Petra R wrote:

Why do people need so much protection from their own poor judgment? And more to the point, why do they expect me (through my fees) to pay for the consequences?

I really don't have the faintest idea how much legal are gonna charge, I just added that not thinking of the consequences, I agree with you on the Legal part.

 

You said "Your Poor Judgment", so that means No New Clients should be accepted on the platform? Just in my case, the client was a Red Flag, doesn't this seem too easy to blackmail a Freelancer by showing off nothing suspicious so the Client doesn't alarm the sixth sense, and then after receiving the work he Cancels the contract and throws a Refund Request.

 

All the time you're mentioning $10, and I'm dragging you to the conversation of such things involving big amounts.


Haider I wrote:

 


Thanks for your response, in my opinion, Upwork should handle the disputes like Judges, based on the facts and conversations, even if they've to hire some Legals.


As escrow agent, Upwork is forbidden by law from doing any such thing. It can release funds once both buyer and seller agree that the terms of escrow have been met. In the absence of such agreement, it can encourage a settlement between buyer and seller. In case of non-response to a dispute, it can release funds to the disputant. Beyond that, it can offer no recourse but third-party arbitration, which has inherent expenses and risks; neither those expenses nor risks are determined by Upwork, though they do mitigate the expense by putting up a third of it themselves.

then how freelncer.com handles it? unlike upwork?

petra_r
Community Member


Haider I wrote:

 

While on the Interview, the client (New to Upwork) asked to make payments out of Upwork, which I refused. Then he shared the requirements for his task and said that he wants me to work on a little Free Trial before getting to the full task. I asked him for activating the first milestone of $10, as the trial he wanted was worth it.


Next time, walk away at this point and save yourself all the drama that was always going to follow.

 

This kind of nonsense is why I do not do paid trials / paid tests.

 

Life's too short to end up with hassle over $ 10

 


Petra R wrote:

This kind of nonsense is why I do not do paid trials / paid tests.

Life's too short to end up with hassle over $ 10

 


Thanks, Petra, I always like your straight forward posts here. 

What if this wasn't a paid trial but a full contract, let's say $200, who on earth would pay $290 and their precious time of 30 days to get their $200. Thank God that was Low as $10 for me, but I learned that there's no such thing as Fix Price Protection as long as the disputed money is lower than that of Arbitration.


Haider I wrote:

Petra R wrote:

This kind of nonsense is why I do not do paid trials / paid tests.

Life's too short to end up with hassle over $ 10

 


I learned that there's no such thing as Fix Price Protection as long as the disputed money is lower than that of Arbitration.


That isn't strictly speaking true, because as long as you have $ 291 to throw into the arbitration pot if need be, you can call the client's bluff and walk away with the money in Escrow and the arbitration fee.


You also missed my main point: The red flags were there.

I guess the main reason I have never been in a situation where I NEEDED fixed price protection is because I walk away when I see those red flags waving merrily in my face.


Petra R wrote:
you can call the client's bluff and walk away with the money in Escrow and the arbitration fee.

So you mean if a Freelancer gets to arbitration and proves himself clean, then he'll get the disputed Money from the Escrow and also get back the fee of $291 paid for Arbitration?


Haider I wrote:

Petra R wrote:
you can call the client's bluff and walk away with the money in Escrow and the arbitration fee.

So you mean if a Freelancer gets to arbitration and proves himself clean, then he'll get the disputed Money from the Escrow and also get back the fee of $291 paid for Arbitration?


If you both decide to go to arbitration, then no, you don't get your fee back (once again, this process needs to be paid for - it isn't free!). You would only get your $10, and only if you win. But if you're willing to go to arbitration and the client isn't, then you win by default and you do get your fee back, along with your $10. You listed the facts yourself in your first post:

  • If one party pays for arbitration and the other does not, the dispute is found in the paying party’s favor. Escrow is released to the paying party and the arbitration fees are returned.
  • Arbitration fees are non-refundable once the case is filed with AAA.


Haider I wrote:

Petra R wrote:
you can call the client's bluff and walk away with the money in Escrow and the arbitration fee.

So you mean if a Freelancer gets to arbitration and proves himself clean, then he'll get the disputed Money from the Escrow and also get back the fee of $291 paid for Arbitration?


No, I am saying if the freelancer pays the arbitration fee and the client does not, the freelancer will get their money back and the funds in Escrow.

The second the freelancer has paid the arbitration fee on a contract worth less than $ 291, the client can only lose, if they pay the arbitration fee they lose money, and if they do not, they also lose the money in Escrow

So the client will not proceed with arbitration because it makes no sense.

 


Haider I wrote:

You said "Your Poor Judgment", so that means No New Clients should be accepted on the platform?


No, it obviously does not. This client first tried to pay you off the platform and then messed about with the trial contract.

 


Haider I wrote:

All the time you're mentioning $10, and I'm dragging you to the conversation of such things involving big amounts.



"Big amounts" meaning thousands then make arbitration worthwhile.

 

a_lipsey
Community Member

You are protected though. Decline the refund, and let him open a dispute. I sort of doubt he will. But if he does, stand your ground and demand payment or abitration. He won't go to arbitration. Not if he won't just pay the $10. 

 

I'm a little confused at how a client can cancel a contract once work has been submitted. It seems like that should not be possible at this point. 


Amanda L wrote:

 

I'm a little confused at how a client can cancel a contract once work has been submitted. It seems like that should not be possible at this point. 


It's because there are lots of unskilled freelancers who do shoddy work and/or try to pass off stolen work as their own (this is no reflection on the OP, just a general observation). So yes, clients do need to be able to cancel their projects and/or ask for a refund.


Amanda L wrote:

You are protected though. Decline the refund, and let him open a dispute. I sort of doubt he will. But if he does, stand your ground and demand payment or abitration. He won't go to arbitration. Not if he won't just pay the $10. 

I'm a little confused at how a client can cancel a contract once work has been submitted. It seems like that should not be possible at this point. 


Thanks, Amanda, for your response. I'm not protected though, just look at the facts and ground realities here, If I don't respond to Refund it's automatically going to the client after 7 days, and if I go to Arbitration and the Client didn't go to Arbitration, of course, I'm having my money back but keeping in mind that I'm spending $290 for Arbitration just to prove that I own $10.

 

And Yes a Client can easily Cancel a Contract even after work has been submitted.


Haider I wrote:


Thanks, Amanda, for your response. I'm not protected though, just look at the facts and ground realities here, If I don't respond to Refund it's automatically going to the client after 7 days, and if I go to Arbitration and the Client didn't go to Arbitration, of course, I'm having my money back but keeping in mind that I'm spending $290 for Arbitration just to prove that I own $10.


You are protected though - to some degree. Yes you have to pay $290 but so does the client, so they must really want to sting you for that $10 if they are willing to pay $290 to do it!!!

 

yes your spending $290 just to prove you own $10

on the other hand your spending $$$'s on a computer to earn that $10 $$$'s on rent for a place to work from etc etc.

 

The obvious answer is dont do work for $10 - you are willing to use your time and resources to earn $10 but not willing to defend your $10 so why bother.

 

Refuse the dispute and see what happens youve not been asked to pay anything yet.

prestonhunter
Community Member

Upwork does not want anybody to use the dispute or arbitration processes.

 

Not for $10 contracts, and not for $10,000 contracts.

 

Obviously Upwork loses money any time it needs to involve its personnel in squabbles between its users, and any time it needs to pay arbitration fees.

 

Upwork makes money when clients hire freelancers and pay them and Upwork can collect fees from the client payments.

 

Obviously a client who hires a freelancer to do work, and then receives that work, and then tries to manipulate Upwork's systems to avoid paying... That is obviously a bad client. I don't know if this type of bad client behavior is increasing... If somehow people are spreading the word about how to scam Upwork and scam freelancers and get work done for free... But if this type of thing gets out of hand, I won't be surprised if Upwork clamps down on it by restricting or removing some of the freedom clients have to file "disputes."


Preston H wrote:

 

Obviously a client who hires a freelancer to do work, and then receives that work, and then tries to manipulate Upwork's systems to avoid paying... That is obviously a bad client. I don't know if this type of bad client behavior is increasing... If somehow people are spreading the word about how to scam Upwork and scam freelancers and get work done for free... But if this type of thing gets out of hand, I won't be surprised if Upwork clamps down on it by restricting or removing some of the freedom clients have to file "disputes."


I don't see how you can be in a position of always declaring that people are "bad clients", when you have no way of knowing whether the work that they received was done with any degree of competence.

re: "I don't see how you can be in a position of always declaring that people are 'bad clients', when you have no way of knowing whether the work that they received was done with any degree of competence."

 

If Upwork's business model is based on this:

a) Client hires freelancer

b) Freelancer does work

c) Client pays freelancer

d) Upwork collects fee

 

...Then we can classify a client who breaks this business model as a "bad client," regardless of whether or not that client is a bad person or not.

 

I'm not making a judgement about the freelancer's work.

 

Perhaps you would prefer to use the phrase "unprofitable client" or "unprofitable client/freelancer transaction." Or something else?

 

This is NOT the proper way to use Upwork:

a) Client hires freelancer

b) Freelancer does work

c) Client pays freelancer if client likes the work, but doesn't have to pay if client claims not to like the work

 

That is DIFFERENT than what I am saying should be the approach clients have to using Upwork. I am saying that Upwork is better off if clients simply pay for the work they hire freelancers to do. Furthermore, I am saying that clients themselves are better off if they simply pay for the work they hire freelancers to do.

 

Upwork allows clients to hire freelancers, with essentially no regulation of rates. If clients want to try to hire a freelancer to do Task X for $X.00.... then I'm fine with that. If freelancer actually does Task X, then the client should pay the agreed-upon rate. If the client doesn't love the work, she doesn't need to use it. And she doesn't need to hire that freelancer again.

 

Clearly it doesn't benefit freelancers when they finish a task and clients avoid paying for the work by claiming to not like the work. Clearly Upwork doesn't make money if a client demands a refund and that refund is granted, thus allowing the client to receive work without paying for it and without paying fees.

 

Real clients are hurt by this refund practice as well. (I'm not counting scammers who never intended to pay from the outset.) The success of real clients is undermined and hindered when they think that they can use refunds as a "get out of jail free" card. Rather than managing their projects thoughtfully, it is damaging to clients' success if they think they can just put a few coins into the "Upwork vending machine" and get whatever they want at whatever price, because they can always click a "refund" button.

 

In this post, I have attempted to explain my thoughts about what you wrote about: Which is what happens when clients receive work from low-quality freelancers. But I want to be very clear about something: This is NOT the "bad client bahavior" I have been talking about. I have been criticizing clients who request refunds for valid, completed work as a way to manipulate Upwork's system and avoid paying.

 

Is there a way for Upwork's automated algorithms and software systems to know when a client is requesting a refund because:

a) the client is trying to manipulate the system to get free work

b) the client is asking for a refund because the freelancer's work was low-quality

c) the client is asking for a refund because the freelancer did not complete the work

 

...?

No.

There is no way for Upwork's software to know that.

======

Clients SHOULD be allowed to hire cheap, incompetent freelancers.

They should not seek a refund if they don't like the results.


Christine A wrote:

That is obviously a bad client.

I don't see how you can be in a position of always declaring that people are "bad clients", when you have no way of knowing whether the work that they received was done with any degree of competence.


Consider the source... Some people just state the figments of their imagination as fact. Repeatedly.

Presumably on the assumption that those who don't understand the source will be impressed.

Preferably in multiple long, rambling posts.

 

Edited to add: Q.E.D.


 

chasb
Community Member

To the OP, dispute any refund vigorously!

 

On the general topic now raised, perhaps the alarming increase in reports of clients raising disputes, reported on these very pages should serve as an indicator?

petra_r
Community Member


Chris P wrote:

 

On the general topic now raised, perhaps the alarming increase in reports of clients raising disputes, reported on these very pages should serve as an indicator?


Is there such a thing as an "alarming increase?"

chasb
Community Member


Petra R wrote:

 

Is there such a thing as an "alarming increase?"

The frequency of such reports does seem to suggest so.

Presumably the 'gurus' here somehow feel able to debunk that - but on what basis?

 


 

petra_r
Community Member


Chris P wrote:

Petra R wrote:

 

Is there such a thing as an "alarming increase?"

The frequency of such reports does seem to suggest so.

Presumably the 'gurus' here somehow feel able to debunk that - but on what basis?

 


I was asking whether there is such an alarming increase. I have been active on the forum for many years, and disputes have always been "a thing" - I have no data, so can't say whether there has been an increase, let alone an "alarming" one, but I haven't noticed one.


As you state that there has been an alarming increase, presumably you have some basis on which you state this?

 

 

chasb
Community Member

I take your point.

But to my eyes, this topic does seem to be picking up in frequency here.


Christine A wrote:
whether the work that they received was done with any degree of competence.

 

I think you didn't notice this part of the Original Post.

 

Capture1.PNG

tlsanders
Community Member

I agree with you that this is a real problem. The people most in need of fixed price payment protection are the least likely to be able to use it, and it is least worth their while to do so (because it will usually result in a net loss if they go to arbitration and win). 

 

This bothers me a lot, and I've given it a lot of thought over the past couple of years, but I haven't been able to come up with a better alternative. As the escrow agent, Upwork can't be the "judge" in a conflict between client and freelancer. And, qualified arbitrators are expensive. In my experience, the minimum fee is $1200-1500, so it seems that Upwork has negotiated a nice discount, probably due to volume. 

 

The one thing I wish Upwork would do is make it much clearer to freelancers up front that they really have no protection on fixed price jobs if they aren't willing and able to pony up $291.

 

I'm surprised, though, that Upwork didn't just pay you. Even though that's not required, they often do when a very small amount is in dispute.

 

 

ben-howard
Community Member

Hey Haider,

I'm in the same situation for a $500 contract and with the client only offering to pay half the amount of $250 and the arbitration fee now at $291 so I can't win either way even if the dispute goes in my favour I'll only ever get a maximum of half the contract amount. 

 

I really don't understand why I have to pay $291 for arbitration, isn't this why I pay 20% of this contract amount to you in UpWork fees + my monthly subscription? I think this whole situation is totally unfair and if the case goes in my favour I should receive the full $500.
There is 0 seller protection on UpWork! It's making me think twice about operating as a freelancer on the platform.  I'm already paying 20% in fees for this contract $100 + $15.99pm for freelancer premium account. I literally feel sick typing this message. 

I really hope UpWork can review this and resolve disputes in-house, or alternatively build the dispute fees into the fees we pay for work.

Hey Benjamin, According to my previous experiences, I think you should go for Arbitration due to Following Reasons:

Getting half payment directly, AND, Getting full payment through Arbitration by giving Half of Contract money to AAA. Are two Really different Things.

For a Freelancer in your situation and with same Amount, the earnings are the same either way.

BUT

Just think from the client's Perspective, He has two Options:

1) He pay you Directly the Half Payment so it Cost him Total $250

2) He Pay $292 for Arbitration, Next $500 to you. Total Cost to Client $790

 

I hope you understand, discuss these options with the client, he may agree with you to release Full Payment.

Benjamin, you get first dibs at the arbitration fee. Pay it, and the client will probably concede the dispute. In that case you get your arbitration fee back and ALL of the Escrow money...

ben-howard
Community Member

Just to add:
I'd technically be $42 (- fees so maybe closer to $32) better off with the client's offer of $250.

There are no guarantees that I will win the dispute, although I do feel strongly that I'm in the right with this one as the client basically just hired someone else cheaper on the same day I was finishing up the project.
Upwork should impose some platform rules for this sort of stuff, so if a client breaches these rules it goes in the freelancer's favour and would avoid having to go to Arbitration in the first place. This, of course, should work both ways for the freelancer and client. 


There is also one other MAJOR factor that needs serious revision! If I was to accept the lower $250 offer the client can still leave feedback (which will, of course, be negative) as it's within the 14-day window. If I go through the Arbitration which can take 30 days then I am guaranteed no negative feedback. 

This is ultimately the deciding factor why I'm going to pay, otherwise, I would probably have taken the money. Again this is stupid because if UpWork just reviewed their feedback policy for disputes I wouldn't be costing them $292.


Benjamin H wrote:


There is also one other MAJOR factor that needs serious revision! If I was to accept the lower $250 offer the client can still leave feedback (which will, of course, be negative) as it's within the 14-day window. If I go through the Arbitration which can take 30 days then I am guaranteed no negative feedback. 


Wrong. The client can leave feedback anyway, as can you.

 

If you opt for arbitration, chances are the client will not opt for arbitration and you end up with the money in escrow AND the arbitration fee back.

wlyonsatl
Community Member

Haider,

 

In effect there is no reliable payment protection for freelancers who provide fixed price services that pay less than the cost of arbitration. I do not expect this element of working on Upwork to change.

 

Upwork could at least give freelancers enough information about a client's history on Upwork, such as...

 

Number and percent of client's refund requests on previous projects

Number and percent of client's use of arbitration

 

..., but Upwork is very reluctant to give freelancers much information about clients, so freelancers are stuck with blindly trusting that a new client is the type of person worth dealing with.

 

If you can use the hourly project setup, that would likely give you better assurance of client payments for work performed. It is my understandng a project can be set to allow for as little as one hour as an allowed maximum - I advise you to avoid every using manual hours for clients you don't know well and trust.

 

Good luck with your future clients!

Just another reason I prefer hourly. Payment protection and none of this hassle of scope creep.

3ad490bb
Community Member

Believe me.. people do crazy things... it was a 400$ job. I was willing to pay 300 for an unfinished job i don't like. But the freelancer is so proud..... so she is going with private arbitration for her pride i guess.... so I now i have to pay 330 extra because someone is kookoo

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