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where in user agreement/terms of service are chargeback issues with freelancers addressed

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Community Leader
Lee Ann M Member Since: Feb 23, 2016
1 of 14

Today I received a notice from Upwork that a client had initiated a chargeback on about $1,500 worth of work I did and was paid for about two months ago.  I never heard boo from the client.  I did a little research and understand that by doing so the client violated section 6.5 of the user agreement ("No Refunds").  The notice from Upwork said they were disputing the chargeback and my hours/money would be covered, but also referred to them removing the money from my account?  I am not sure how Upwork would be able to remove money from my bank account, but I am also trying to find where in the user agreement/terms of service etc. freelancer liability for client chargebacks is discussed.  Also, I'm not sure how Upwork Payment Protection plays a role here because if the client does a chargeback and Upwork can't successfully dispute it either they are out the money or I am out the money because the client has violated the terms of service.  Why does Upwork care if I did manual time or the time tracker, etc., in that instance (not a facetious question)?  Thanks!

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Community Guru
Tonya P Member Since: Nov 26, 2015
2 of 14

If you did everything correctly so that Upwork cannot rely on any loopholes, you are covered for hourly work.

Your time records must show certain levels of activity and you must have memos describing the work. 

 

For fixed price work, the protections are minimal to none, in my opinion. What an unpleasant situation! I hope that you are covered.

 

In the past, freelancers have reported that Upwork has clawed back money from their accounts and even left them with an account deficit after a client's credit card fails or the client challenges the payment via their credit card provider. Very ugly business. 

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Community Guru
Petra R Member Since: Aug 3, 2011
3 of 14

@Lee Ann M wrote:

  Why does Upwork care if I did manual time or the time tracker, etc., in that instance (not a facetious question)?  Thanks!


 Because if you did manual time the protection does not apply.

If your hours were tracked strictly according to the rules for hourly protection, tracked, adequate activity levels, meaningful work memos etc) Upwork covers the loss.

If you did not, they will not cover the loss, and put your Upwork account into a negative balance. Essentially that would mean that you could not withdraw anything until the negative balance is paid off.

 

Yes, the client violated the user agreement by filing a chargeback.

 

So sorry this happened to you Smiley Sad

 

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Moderator
Avery O Moderator Member Since: Nov 23, 2015
4 of 14

I'm sorry to hear this experience, Lee Ann. But I'm glad to know that the team has reached out to you and requested your assistance to dispute the client's chargeback request. 

Manual time is not covered by the Payment Protection for Hourly Contracts. As stated on Section 6. Payment Protection, of the Hourly, Bonus, and Expense Payment Agreement with Escrow Instructions, logged hours on the Work Diary should have sufficiently been annotated with memos of the current activity being done on the contract while the Upwork Desktop App is tracking time. If the hours that were chargedback didn't meet the requirements for the Upwork Hourly Protection, the money will be returned to the client's payment method, unless the Upwork Desktop App was used to track hours, and the work done was sufficiently annonated.


-Avery
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Community Guru
Petra R Member Since: Aug 3, 2011
5 of 14

@Avery O wrote:

 If the hours that were chargedback didn't meet the requirements for the Upwork Hourly Protection, the money will be returned to the client's payment method, unless the Upwork Desktop App was used to track hours, and the work done was sufficiently annonated.


 That is not correct (and phrased most confusingly, it applies to disputes, not chargebacks)  when it comes to a successful chargeback. The money has, in that case, already been pulled back by the bank.

 

 

If the chargeback is successfully defended (often impossible) - nobody has to cover any loss because there isn't one.

 

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Community Leader
Lee Ann M Member Since: Feb 23, 2016
6 of 14

So I guess my confusion also relates to what applies retroactively as well as proactively.  If i hadn't been paid yet, and there was a problem, I guess I would have accepted kicking myself for not using the time tracker, etc.  I don't think the user agreement provides for this chargeback situation because it doesn't address the freelancer's liability/responsibility in cases where the client violates the agreement and it doesn't make clear that the payment protections and compliance/lack thereof with them applies to payments that have long been water under the bridge.  

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Community Leader
Lee Ann M Member Since: Feb 23, 2016
7 of 14

Thanks, I looked at the Hourly, Bonus and Expense Payment Agreement.  It contains the following:

 

"4. INSTRUCTIONS TO PAY IRREVOCABLE
Client’s instruction to Upwork Escrow and its wholly owned subsidiaries to pay a Freelancer is irrevocable. Such instruction is Client’s authorization to transfer funds to Freelancer from the Client Escrow Account or authorization to charge Client’s Payment Method. Such instruction is also Client’s representation that Client has received, inspected, and accepted the subject work or expense. Client acknowledges and agrees that upon receipt of Client’s instruction to pay Freelancer, Upwork Escrow will transfer funds to the Freelancer and that Upwork, Upwork Escrow, and other Affiliates have no responsibility to and may not be able to recover such funds. Therefore, and in consideration of services described in this Agreement, Client agrees that once Upwork Escrow or its subsidiary has charged Client’s Payment Method, the charge is non-refundable."
 
So it appears the chargeback also violates this provision, but cannot Upwork show the client's bank that the client entered into the agreement with Upwork that included this provision, and so the chargeback is fraudulent?
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Community Guru
Petra R Member Since: Aug 3, 2011
8 of 14

@Lee Ann M wrote:

So it appears the chargeback also violates this provision, but cannot Upwork show the client's bank that the client entered into the agreement with Upwork that included this provision, and so the chargeback is fraudulent?

 The problem is that if the client claims their card was used fraudulently or without authorisation from the card owner, it's mostly "game over."

 

Chargebacks for "not received" or "bad quality" can often be successfully defended.

 

"Unauthorised used" ones not so much.

 

The chargeback itself may or may not be fraudulent, depending on whether the card holder and the client are the same person or not (hacked PayPal account, stolen card etc etc)

 

 

Here is the WP definition of Chargeback Fraud

 

This bit is particularly interesting:

 

"When a chargeback occurs, the merchant is accountable, regardless of whatever measures they took to verify the transaction."

 

 

 

 

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Community Leader
Lee Ann M Member Since: Feb 23, 2016
9 of 14

hmmm...I guess I won't be able to learn what basis the client used for the chargeback.  I heard not a peep out of them, which was kind of the case the whole way through the job.  They initially said I wouldn't need to do any independent research for the job as the client would provide it to me.  Because the client was inaccessible I ended up creating the entire product entirely from my own research, as I informed them I was doing multiple times Smiley Indifferent

 

It's a weird world....

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Community Guru
Nichola L Member Since: Mar 13, 2015
10 of 14

@Lee Ann M wrote:

hmmm...I guess I won't be able to learn what basis the client used for the chargeback.  I heard not a peep out of them, which was kind of the case the whole way through the job.  They initially said I wouldn't need to do any independent research for the job as the client would provide it to me.  Because the client was inaccessible I ended up creating the entire product entirely from my own research, as I informed them I was doing multiple times Smiley Indifferent

 

It's a weird world....


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Horrible story. If you lose out on this remember that the client has acted fraudulently and may not use the work you created, so if you see it on the internet  youcould get at them by asking for a take-down or indeed, outing them on social media.

 

I hope Upwork is able to permanently terminate this "client's" account.  

 

@Petra That is a chilling WP article on "friendly fraud". Smiley Sad

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