otas32
Member

So, Upwork does NOT use an Escrow Account???

It had never happened to me until now, but after a discussion wih someone from Upworks support staff weeks ago, what I feared finally came to happen.

The problem I think lies at the root that Upwork does not seem to be working with an Escrow account (like our beloved deceased Elance did). Which means, that even though a project reads "funded", it actually isn't!

Just now, I received a message, saying my account finantial transactions have been "limited", and to check my email on regards to that.
The email explains, that the last job I did, and for which I was expecting payment this next April 24th, has the client's payment method under investigation. 
The discussion I had with that support "specialist", was that if Upwork did not confirm payment method until AFTER job completion, it meant that Upwork didn't have the money yet, in an Escrow account, safe and sound, and ready for mediation in case there was an issue at the end of a project. In order to protect BOTH parties.
It seems, the only one safe here, is a potential customer, because they can even get away with FRAUD!

I wonder, does Upwork charge the 10% commission up front? Because that would explain why they don't care things can work out this way. Where a customer can simply cancel a credit card payment and then screw the freelancer, with WORK IN HAND and laughing all the way at how easy it was to get FREE WORK!

THIS IS HOW IT SHOULD WORK:
ALL FUNDS SHOULD BE DEPOSITED SINCE THE BEGNINING into an Escrow account. That's how it really would guarantee, that if the freelancer does not comply with project requirements, the client can then WIDTHDRAW  funds (minus what ever commission must be payed for the trouble to Upwork for it's mediation) OR, that Freelencers also get their due if a client tries to run with the work AND the money (of course, we already have payed a juicy 10% which should be enough to cover things like this!).

Right now, as it stands. Freelancers are wide open to being screwed by the people they work for. And are NOT PROTECTED by those we pay 10% of our shares, as an agreement of mutual benefit.

In that email, I was told not to worry, that I could still continue to work with other customers... yeah, right!
It was $300, but I've done projects for over $1000 in the past.
How can I trust putting more work in, if I can be so easily screwed again in the future?????

40 REPLIES 40
lizablau
Member

Very sorry that happened to you. I'm wondering if this happened because you accepted a job where the client's payment method was "Unverified." I've never heard of this happening with a "Verified" client, as the credit card is processed and the escrow is fully funded before the job starts. Meaning, the funds are already taken out of that "Verified" method of payment. I've only heard of a "Verified" client's funds not being released if it turns out they used a stolen credit card or something like that.

Lisa.

I'm not new to freelancing.

If you have not checked out how things work here, I suggest you do.

Confirmed payment of $10 is in the project's transacion records. The card was verified.
In fact, when a project appears as funded, it means that payment has been made, and verified. Or at least, that initial payment.

The thing is. When it comes to credit cards (not debit), it's very simple. I own a store. At closing hour, you have to make sure to close all credit card payments, or else people can cancel a transaction, and you get stuck with a boucher you can't cash in.
With Upwork it seems, that is done until AFTER a project has ended. That makes NO SENSE!
A client can back out on paying any time, this client in particular, could have done so right after I started working on the project, with Upwork non-the-wiser (or caring, since they got their $10 at least to pay for what ever small cost my project represents) until they actually go in to withdraw the money from the transaction.

IF AN ESCROW ACCOUNT was used, this would not be an issue.
The money would have been in Upwork's posession since the start, and at the end, all that has to happen is that the client closes the project and agrees for me to be paid, and then, the money is released from the Escrow account into my respective payment recieve method.

All of this, is what I tried to argue with the "support specialist" I talked to weeks ago. I was telling him/her (can't remember gender) that Upwork did not have the actual money in their posession and that what could end up happening, is that a client could cancel the payment transaction and run with free work... which is exactly what happened!
No matter how much you VERIFY a form of payment, transactions can still be cancelled, unless you actually withdraw the money from the clients credit card emmitter. If not, it's just an incomplete process, one of which any fraudulent dishonest person can back out.


@Oscar B wrote:

Lisa.

I'm not new to freelancing.

If you have not checked out how things work here, I suggest you do.

Confirmed payment of $10 is in the project's transacion records. The card was verified.
In fact, when a project appears as funded, it means that payment has been made, and verified. Or at least, that initial payment.

The thing is. When it comes to credit cards (not debit), it's very simple. I own a store. At closing hour, you have to make sure to close all credit card payments, or else people can cancel a transaction, and you get stuck with a boucher you can't cash in.
With Upwork it seems, that is done until AFTER a project has ended. That makes NO SENSE!
A client can back out on paying any time, this client in particular, could have done so right after I started working on the project, with Upwork non-the-wiser (or caring, since they got their $10 at least to pay for what ever small cost my project represents) until they actually go in to withdraw the money from the transaction.

IF AN ESCROW ACCOUNT was used, this would not be an issue.
The money would have been in Upwork's posession since the start, and at the end, all that has to happen is that the client closes the project and agrees for me to be paid, and then, the money is released from the Escrow account into my respective payment recieve method.

All of this, is what I tried to argue with the "support specialist" I talked to weeks ago. I was telling him/her (can't remember gender) that Upwork did not have the actual money in their posession and that what could end up happening, is that a client could cancel the payment transaction and run with free work... which is exactly what happened!
No matter how much you VERIFY a form of payment, transactions can still be cancelled, unless you actually withdraw the money from the clients credit card emmitter. If not, it's just an incomplete process, one of which any fraudulent dishonest person can back out.



I'm fully aware of how things work here. "...form of payment, transactions can still be cancelled, unless you actually withdraw the money from the clients credit card emmitter."And I've been told by multiple Upwork support agents that the funds ARE fully withdrawn from verified client's credit cards for the escrow accounts. Meaning, their credit cards were charged for the full job amounts and that amount is put into escrow.

 

But you still didn't answer the question -- was thie client verified or unverified?

 

I thought I did.
Yes, it was verified, didn't you read that the client had made a payment of $10 from that card for his subscription?

And no, money is not withdrawn until AFTER project closure. That's why I was so insistent with the support specialist. Because things like this can happen.
There is no ESCROW ACCOUNT.


@Oscar B wrote:

I thought I did.
Yes, it was verified, didn't you read that the client had made a payment of $10 from that card for his subscription?

And no, money is not withdrawn until AFTER project closure. That's why I was so insistent with the support specialist. Because things like this can happen.
There is no ESCROW ACCOUNT.


I know nothing about $10 payments or what he was "subscribing" to. He could have paid with that from a drug store credit card that had a limit on it.  All I care about is the little checkmark on the client's profile that says "Verified." 

 

Also, it's quite the process to get "verified" these days. I've had two clients recently struggle to become verified and almost gave-up, as Upwork has so many check points in place to ensure the clients have a legit financial funding source. Upwork goes above and beyond to ensure freelancers are protected, desite what you believe.

So, explain something please. Why the five day period then for payment withdrawl (which I was clearly explained was necesary to verify form of payment) even for payment verified fully funded projects?
THe five day wait period applies to all projects.


@Oscar B wrote:

So, explain something please. Why the five day period then for payment withdrawl (which I was clearly explained was necesary to verify form of payment) even for payment verified fully funded projects?
THe five day wait period applies to all projects.


I believe that's to allow the client a period to dispute the work, but even if they do, it's still a lengthy process for them to receive their money back. It's escalated to the Dispute department.  

lysis10
Member

"I wonder, does Upwork charge the 10% commission up front? "

 

To answer this question, no. At first, it looks like they do but first money goes back to the client and the 10% is reversed on your end. So basically, if the client paid $65, $65 is returned to the client and you aren't charged any fees.

I know I'm not charged fees, that's not what I'm talking about.

But they did charge $10 at the beginning, which is a form to confirm payment method.
It's right in the records of this project:

Apr 6, 2016 PaymentPaid from American Express ------------  $10.00

Apr 6, 2016 Membership Fee2016-04-06 - Payment for Freelancer Plus membership ($10.00)


It appears as payed by the client.

The rest of it, the 10% commission and MY MONEY are greyd out as pending, and what I was told, is "under investigation"... which basically means, there was a problem withdrawing the funds, and now, I'm screwed.

Like I said in a previous reply. Those $10 can easily cover what ever costs this project and my use of the platform means to Upwork. In fact, a LOT of most projects here seem to run for under $100, so $10 seems like it more than covers what ever administration costs they have. So if a project goes south, yes, they did'nt get $33 out of my $330, but at least they get $10 for just setting things up.

Me?, I spent a week and a half in a VERY COMPLEX project, I even busted three fingers with my car door purchasing materials, and with NOTHING TO SHOW FOR IT!

As a client, I have hired fixed-price contracts.

 

My credit card was charged for the full amount of the contract as soon as I hired a contractor.

 

If the contractor finished the work, she received that money. My credit card was not charged again. She received the money that was in escrow.

There is something I don't understand then.

If payment has been verified since the begining, and the project has been "funded", then why is there a wait period of five days until one, as a freelancer, can withdraw funds?

When I asked a support specialist about this, they said that the period is necesary, to verify form of payment.

I then said: huh? But don't you verify this since the start?

Which then brought the discussion to the fact, that, how could the project be funded AND payment verified, if they still needed five days to confirm mode of payment AFTER project closure???

They could not give me a straight answer.

And now, I'm going through exactly what I feared.

The five-day wait is annoying - even more so if one has to wait about 20 days if the client does not release funds when requested. However, in the off-site freelancing world (as doubtless you  know) payment can be just as slow. I often have to wait a month or more before I get paid for a gig - I always do get paid, but hardly ever the day after presenting my invoice.


@Oscar B wrote:

I know I'm not charged fees, that's not what I'm talking about.

But they did charge $10 at the beginning, which is a form to confirm payment method.
It's right in the records of this project:

Apr 6, 2016 PaymentPaid from American Express ------------  $10.00

Apr 6, 2016 Membership Fee2016-04-06 - Payment for Freelancer Plus membership ($10.00)


It appears as payed by the client.


 ????

Your client was charged for your Freelancer Plus membership?


@lia B wrote:


 ????

Your client was charged for your Freelancer Plus membership?


 Lia, this is a guess, but I suspect that Upwork doesn't have a "product" used specifically for credit card verification. They are probably using and then reversing payment on a Freelancer Plus Membership to test the validity of the card because that is the lowest-priced standard item available.

The money does go into escrow, but a client can refuse to release payment, even if it has been funded. When this happens, it seems that a freelancer has no choice but to dispute the client's decision.

 

It is also possible to start a job where escrow has been agreed to but payment is unverified. This does not at all mean a client is a 'baddy' but it is certainly a situation to avoid. Upwork does warn one in these circumstances.

re: "A client can refuse to release payment, even if escrow has been funded. When this happens, it seems that a freelancer has no choice but to dispute the client's decision."

 

Yes.

This is my understanding.

 

As a contractor, I have often told clients this. I tell them, before the project begins, that when I finish the project they will be able to choose to pay for it and retain ownership of the work I did for them, or they can choose to not pay.

 

I think that helps them feel confident that they won't be "ripped off" by having paid money for something they never receive.

 


@Oscar B wrote:

I know I'm not charged fees, that's not what I'm talking about.

But they did charge $10 at the beginning, which is a form to confirm payment method.
It's right in the records of this project:

Apr 6, 2016 PaymentPaid from American Express ------------  $10.00

Apr 6, 2016 Membership Fee2016-04-06 - Payment for Freelancer Plus membership ($10.00)


It appears as payed by the client.


Am I missing something? How is it that the CLIENT was charged for the "Freelancer Plus Membership"?

I understand that Oscar is saying that the $10 charge proves that payment was verified... that's why he's frustrated. That makes sense. I'm suggesting that either:

a) he's misunderstanding this payment (no disrespect intended) or
b) there was a serious glitch in how Upwork charged for Oscar's membership or
c) I am misunderstanding how Freelancer Plus Membership works (I don't use it, so can't compare payment records of my own experience) or misunderstanding something else entirely.

?

otas32
Member

Honestly, I think it's a matter of lowering costs for Upwork.
It must be a lot cheaper to simply let things run their course, they still have that initial fee for registration from the customer ($10), which will cover any administration costs. So if in the end, they can't cash in the payment from a "verified" form of payment, they don't get their comissiont, but remember, they haven't done a thing since the start. It's been all on the freelancer! So if payment is not made, who loses?
Not them. The freelancer is the one at risk. His/her payment.

Instead. If they where doing things THE RIGHT WAY. Which is with an ESCROW ACCOUNT. Then their administration costs would go up. Because they would have to arbitrate projects. They would have to go through an additional step in the process, where they first deposit the money into the Escrow Account, and then release it on confirmed satisfactory project conclusion. And then there is the fee they would have to pay the finantial institution handling the Escrow Account.

This way, it's much cheaper and safer FOR THEM!
Screw the people that are the ones doing the work that brings the money in!!!!
It's been that way since the start.
First, there is no control over excesive lowballing budgets, like $1.50 for a project.
Then, there's the fact that the ones paying commission are the freelancers, not the customers (execpt for subscription, which we also have to pay if we want more connects! This should not be the case! If we already pay a commission, why pay subscription??!!!).
And finally, unfair competition from those that are willing to get payed $1.50 for a project, even if they don't complete it or do a lousy job. 

That last one is almost unavoidable, but something could be done to at least put a handle on it and ,maybe categorize projects where such ridiculous offers could not be made for projects that obviously cost a lot more money.

The part that really pisses me off about all this, is that in that email I was sent, there is no promise of resolution, just an invitation to continue working.
It's like a "tough luck kid!", but keep bringing in the dough!

"nstead. If they where doing things THE RIGHT WAY. Which is with an ESCROW ACCOUNT"

 

Again, Upwork does provide fully funded escrow accounts. They post warnings all over the place that accepting jobs from "unverified" clients is risky, and they can't offer escrow protection in those cases.

re: "When this happens, it seems that a freelancer has no choice but to dispute the client's decision."

 

It is not completely accurate to say that the contrator has "no choice." The contractor can accept the client's request to NOT pay.

That is what happened to me with the last fixed-price contract I hired a contractor for a fixed-price contract. $100 was charged to my credit card. The contractor never got around to doing the project. After a couple months I requested that the escrow money be released back to me. I closed the contract. The contractor accepted the decision and a few days later the money was credited back to my credit card.

Obviously the original poster was referring to situations in which the contractor actually does work.

I agree that the system can be abused. But there is a difference between "the system can be abused" and "there is no escrow."

What can one do to avoid problems due to the potential for abuse inherent in this system? You can do what I do:

When you are working with a client for the first time, only agree to a small project, or the first phase of a project. No more than a couple hours of work or no more than about $100 worth. If you do the project and the client pays in a prompt, professional manner without any hassle, then you can agree to successively bigger contracts. If the client gives you the runaround, then don't work with her any more.

Preston. 
I'm no expert on financial online process.
But based on logic, I have a question for you:

This situation, that has my finantial transactions blocked, for no other reason than an issue with a client's payment (which in itself makes no sense, since it only should affect THAT payment, and not my finantial transactions COMPLETELY - which also speaks of a faulty system). When I look at it as a whole, my point about an absense of an Escrow Account seems the logical explanation.

IF, the client for instance, having a confirmed mode of payment, funded the project, after which it kicked off, and then I delivered the work and then went on to the part about getting my payment.
And if that payment is actually showing in my dashboard, but I can't touch it (the link to withdraw is greyed out and is not a clickeable link).
If there had been an Escrow account, there's no way for instance, for that client to have canceled the payment, or the card itself (which is a way to avoid paying), and so, creating this whole mess which affected me directly in many ways, and for which I don't see Upwork protecting me at all, but only protecting itself, no matter how many times they tell me it's all for my own good.
If they had put the money in an Escrow Account since the begining, the issue would have popped up since then.
No confirmation would be necesary after final work delivery.
All that would happen if I failed to deliver what was expected, and if the client wanted the money back, then Upwork would functionas an abitrer, and give back the money to the client, or go ahead and release funds to me if it was proven I did fulfill all project requirements. That's what an Escrow Account is for.

So my question is: IF there is actually an Escrow Account system in place, how could there be trouble with the money only until that last stage? The only way that can happen, is that Upwork only charged the money to the very end, which is exactly the loop hole by which a rat can get out of paying, because the money was never put in escrow in the first place, to protect it!

@Oscar,

 

I think the way it goes is that the money is indeed charged and put into Escrow when the milestone is funded. However, somewhere in the procedure there needs to be a point when Upwork needs to check whether that money is legit. Since this is really only necessarily when somebody (=freelancer) claims that money, my impression is that only then the whole safety/legit procedure is innitiated (hence the security period once the contract/milestone is basically a done deal).

Oscar, there is an escrow account. It is true there is a let-out for the client. However, if the freelancer disputes the non-release of payment, Upwork intervenes, and very often the decision falls in the freelancer's favour.

 

Whatever Upwork decides, it is still possible for the client (or freelancer) to continue the dispute, in which case, it goes to arbitration, which is a pricy process and one to be avoided if possible.

 

 

kochubei_valeria
Community Manager
Community Manager

Hi Oscar,

 

I can also confirm that client's payment method is charged when a milestone is funded and the money is held in an Escrow account until released to the freelancer. In certain cases Upwork team has to do an additional review of certain transactions and temporary holds have to be placed on financial accounts. Once the review is completed the accounts will be resumed.

 

For additional information please refer to article 6.4 of the User Agreement and Fixed-Price Escrow Instructions.

~ Valeria
Upwork

What happens if there is a problem with those accounts?

I've had contracts suspeded by Upwork when they sensed something suspicious about a client's method of payment. I wasn't allowed to work on the contract until it was cleared-up.

Oscar, can we back up a bit? I've just read that you "busted three fingers buying materials". I am sorry about your fingers, but what materials were you buying and were you reimbursed for them?

hehehe, it was an accident. I was backing up into a parking space, and there was a protusion on a column that was in my blind spot. When I heard a crack, I put the gear forward inmediately and got out to see the damage (it's a brand new car), and in the hurry, I slammed the door on my middle, ring and index fingers. On my right hand. And I had to start drawing that same day (the project had already kicked off). The middle finger turned a little purple (it was the finger tips) and swollen. They are ok now, but painful, no broken bones thankfully, but there is some damage I have to massage out.
The car had small damage on the back door, to the side (not the glass thankfully). It opens and closes without any trouble, but the damage, if I wante it fixed, means a complete paint job on that door. The parking lot owner is non-liable

The fact that this project ended up having problems with payment, and even after the client even haggled so much over the price and was not going to allow me to keep Moral Rights over my work (which according to international copyright law, is almost a given right to artists/authors of unique content), is why I'm so angry about all this.
Adding injury and vehicle damage to the whole thing, doesn't make it taste any better.

Anyway... I'm asuming the worst. I'm just thankful I didn't commit to four more illustrations, that this guy wanted, for even lower pricing. If he didn't intend to pay in the first place, why haggle so much???

Out of curiosity, was this a rush job? From the few posts I've seen on this, it seems the scammers ask for a rush job. I'm guessing something that has been in escrow for a week or longer might be less risky.

Nope. Not a rush job. It was within a week, but because I could deliver in that time. 
He wasn't asking for something quickly done.

Well **bleep**. That's disturbing. 😕


@Oscar B wrote:

[The client] was not going to allow me to keep Moral Rights over my work (which according to international copyright law, is almost a given right to artists/authors of unique content)....


Oscar,

 

In addition to all due sympathy for your accident(s), I have a tip that might be of interest. Upwork's default contract gives away the store on copyright: Without using the term, it effectively defaults to work for hire (legally confined to employment). I hasten to add that Upwork Community Management has confirmed multiple times that professionals are expected to have our own contracts with clients to negotiate details such as copyright transfer, limited/negotiated rights and so on. You might want to have a standard document/text on hand with the terms you expect. Document the agreement via Upwork Messages and you're golden. (You might also want to include a supersession clause, just to counter Upwork's.)

 

Best,

MIchael

Thanks for the tips.

I always discuss moral rights with my customers.

And when I deliver work, if I have agreed to release all reproduction and commercial rights, I send a signed Letter of Agreement, but  in it, it's very clear, I retain Moral Rights over my work.

The reason why I suspect this client wanted even that, is that he probably was not the actual client, but an intermediary, probably selling my work as his own.

His excuse for not allowing me to keep Moral Rights and being able to display my work in my portfolio was, that he was afraid his competition might hire me... (huh?).

He was also looking for a way for me to send the original artwork via postal service. Which I was never going to do.

And he wanted no signatures on it (which of course I can simply add later for my portfolio).

Anyway... I had already placed him in a hostile client category, when he went back on his initial offer of introductory price for first job, and asking for even lower rates for additional work. He loved what I delivered, but didn't want to pay a fair price (so, what's new?).
I had decided I'd rather keep my five star rating, then have a client who was angry at paying more than what he wanted to pay, in order to get work with the same style and quality as what I first sent him.
When it comes to illustration, and even more so, made manually with color pencils, it's not easy to come by someone who can do it, and with the same exact style (digitaly things can look a lot more similar, but manually, it's a diferent story).
I think that maybe that has something to do, with the mentioned payment issues (when I made it clear this was a one time deal).

p.s. The weight of the evidence seems to be that escrow is really escrow. Like any system, it can be played. It also turns out that California law specifies (by definition) the obligation to hold and release, but no timetable once release is authorized by agreement of the parties. Upwork's security holds seem to be within an acceptable window. Upwork does deliver the funds as soon as a client verification matter, say, is resolved. I can say that with confidence because it happened to me. Thanks again to @Valeria for her checking status for me when my client and I were both stymied.

otas32
Member

Ok, here's an update to a previous post I put here.
Before it was about the fact that payment method is only checked on after the project ends.
But never mind that, and why I'm putting up a seperate thread.

I just had a VERY frustrating chat with "customer support" (imagine me drawing the apostrophes in the air btw).

This is how things are:

1- I'm a Top Rated Freelancer. With a five star record. I've been doing high paying jobs mostly (I'm not one of those oh-so-common lowballers that infest Upwork). So that means, commissions from my work are much higher than average. Since average work posts are under $150.

 

2- I have an absolutely clean record. I've been a good boy.

 

3- I just did a job for a client, for an illustration. He recieved final files, and was very satisfied with the result.

4- The project was closed and funds where released on his side. He didn't however submit a review, but clients sometimes just don't. So I'm ok with that.

5- Finantial transactions in my account have been limited. What this means is, that I can't withdraw funds. AT ALL. FROM ANY PROJECT.

6- I was sent an email explaining my customer is under investigation. That he does not reply to emails, and that maybe I should try to contact him (yeah, because if he doesn't reply to his emails, he's going to reply to me in Upwork's workroom!).

 

7- In that same email, I was invited to continue working with other clients. A fact I mentioned to the "support specialist" I just chatted with (btw, the 24/7 phone support, only works during business hours! BUAAAHAHAHA), and asked if any earnings I make will be put on hold. I was told that yes, I can't withdraw squat, nada.

 

8- I then proceeded to explode. Being that, what ever my client is being investigated for, it should NOT have repercussions on MY ACCOUNT. He's gone. You can bet on it. If they decide the payment is dirty money. FINE!
But why is MY ACCOUNT being punished? Why do I have to pay for that?

9- The only answer I get is: "so sorry. But you have to wait until you are contacted after the investigation is over"...
No date, not even an estimate. Just a ticket number.

So why. Why should I continue to look for work. Why?
A Five Star Top Rated freelancer, gets his account put on hold finantially, because some dirty rat of a client did something wrong? 
Is that how it works? Is that how Upwork treats the people that do their best to follow the rules, represent profesionalism, satisfy customers and bring money in????

Where is the fairness in all of this? Can someone please tell me how this makes sense, becuase I don't see how!

Yeah... This happens... It's one of the reasons why I regularly advise contractors to not leave any money in their Upwork accounts.

Yet. There is no sensible reason for this.

Why?

vladag
Community Manager
Community Manager

Hi Oscar,

 

I merged the recent thread you started into this one, since it was on the same subject and related to the same case. Please refer to Valeria's reply on the second page of this thread and feel free to follow up on your ticket, as we won't discuss policy cases in the Community.

Untitled

So no reasonable explanation for blocking the finantial transactions of a freelancer, for something a client has done, is to be explained? Just accepted?