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Upwork's Horrendous Chargeback Protection

Hello everyone,


I've unfortunately had to come across my first chargeback situation with Upwork. A client, after losing a dispute decided to chargeback the transaction 2 months after the fact. Thus the dispute process it self doesn't matter. You just have to chargeback the amount to 'win'.


I didn't realise the fact that Freelancers aren't protected against chargebacks. Naively, I was under the impression that much like PayPal/Venmos Seller Protection, if there was a chargeback they would cover the difference and dispute the claim themselves. Instead I was told by the support team to pay back the amount owed... 


It's just made me disappointed, as I love working on Upwork and have met many wonderful clients on here. But this incident really demoralized my motivation. By this logic any one of my clients could chargeback, whether its $1000, $10,000 or even more. I'm utterly shocked that Upwork advertises it self as a mediator/third party, whilst also promoting "payment protection", "escrow secured" to entice freelancers to come in under the false notion that their pay is secured.


I don't understand how Upwork is better than simply getting your transaction done via PayPal's seller protection plan (probably a lesser % fee). Their business model has to change in the future (I hope), as this is very unsustainable. 


Anyways just wanted to share my frustration/disappointment about Upwork's No Chargeback Protection. 


Community Member

The simplest solution to the chargeback situation (and fraudulent payments) is to prohibit the use of credit cards. But it seems likely that many good clients need to use credit cards and many will be unable to purchase freelance services without them. It is not unusual for companies to operate exclusively on credit, either because they need high business credit scores or they do not have capital for the services upfront but will after their own profits come in from the project.


But prohibiting credit cards would likely tank the number of scam jobs, since it is likely that those clients only use credit cards - often someone else's.

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Community Member

I'm just reading this and I have a similar problem now on this topic, I didn't realize that Upwork is keeping also with the fee of my (not paid) work!! Would have to only work for hours now! This is awful!

Community Member



If Upwork reverses payment to a client Upwork also returns it fees on the same transaction.


For example, if a freelancer earns $100 on a project, Upwork will take a $20 (20%) fee and the freelancer receives $80. If the payment is refunded to the client, or a chargeback occurs on the $100 payment, the freelancer only reverses the net amount received ($80) and Upwork covers the rest ($20).


I don't know where people on this thread have gotten the impression/information that Upwork keeps its fee and requires the freelancer to cover the entire amount of the refund/chargeback payment reversal. 

Community Member

I myself got my assumptions from communications with Upwork. 
It works this way: if the chargeback amount is 100$, you must get to 100$ on you account, which means: earning 120$. Then! After returning the funds to the client they will return the 20% to you. So yeah, you still have to earn more than you got, which is harder with this high of fees (when the charge back amount is big) and then, after weeks or maybe months of free work you just will get the 20% back.

Community Member

That is very interesting, Nare. I have never noticed that on the small amounts I have been forced to "refund" to  a handful of clients over the years. Maybe none of these "refunds" were due to chargebacks. I'll have a look.


In my most recent "refund" to a client my transaction history shows a deduction for my earnings in $X (the total amount of the "refund") and an addition to my earnings of $Y amount (Upwork's fee). So I guess Upwork thinks it needs to take the full amount out of the freelancer's earnings in question, which  translates into the interpretation you have gotten. Upwork could just require the freelancer have the net amount due, but that is not how it works.


But Upwork does credit the amount of its fees back to the freelancer, so the freelancer's net "loss" is the net amount originally paid by Upwork to the freelancer, which would have been net of Upwork's fees.

Community Member

Yes, refunds work differently. I have had 1 refund over the years and at that point the client requested a refund of 1 Milestone and to let him get back the rest from Escrow, which was a very different case than the chargeback. 

Yes, Upwork required me to have the full amount due and then will grant me the fees after all the payments are done. 

It's just if it was about small amounts, that would be more doable. When the amounts are in thousands, and its not every day that such works are on the website, it means, that it's way harder to get to those 120%, while you earn 80% each time.  

Community Member

I went through to the TOS of another freelancing website and they explicitly require clients not to file chargebacks, which would be a TOS violation (and may eventuate in the suspension of the client's account). Does Upwork address the issue of chargeback in its TOS?

Yes. It's the same way on Upwork.


Disputing with credit card companies is a serious TOS violation. Will result in a client being suspended.

It is so, but it's very easy for the clients to register, so being suspended doesn't mean at all that in 15 minutes they wouldn't take another name and register again. So for shammers it's not a big deal.

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