Sorry about the misunderstanding. Avery has already escalated your concern to the team and I see you are communicating with our Executive Escalations team via the ticket. They will continue assisting you directly and will go over the options available in this situation. They will also address your questions about the feedback system.
Okay, let's go through this, for the sake of anybody reading this...
(All the things I'm going to point out below are things that Peter already knows.)
In my comments below, I'm going to speak generally, offering some general tips about how to use Upwork effectively. I don't actually know anything about Peter's project, so I can't say anything about that. But I can react to his comments.
re: "[the freelancer] has promised to accomplish this for $2000 fixed-fee."
You set up a $2000 fixed-price fee for a freelancer you never worked with before and don't know?
Don't do that.
Start with a very small amount, and see if he actually delivers. Even if you're working with a freelancer you know well, don't set up a fixed-price contract for an amount that is larger than you are willing to lose. When you fund an escrow payment, it is not Upwork's intention that you ever get that money back. The user interface doesn't let you sinply click a button and get your money back if you don't feel like paying. You have to get permission from the freelancer in order to get a refund. What if the freelancer does no work, but doesn't feel like giving you a refund? Then you're out $2000, unless you go through the dispute and/or arbitration process. A real mess.
So to summarize: Don't do that.
re: "He told us his Upwork account got hacked shortly after we posted the $2,000 on the ascrow."
His "account was hacked"? First of all, you know his account wasn't really hacked, right? That's like a universal internet rule: When somebody is caught doing something naughty, and they say their account was hacked and they say they didn't really do it... They're not telling the truth.
But also: If a programmer IS telling the truth about her account being hacked? f you are going to hire a computer programmer to create an app for you - an app which presumably contains user information or payments or source code or SOMETHING valuable... do you want to go with a programmer whose account gets hacked as soon as you hire her? Isn't this kind of person supposed to be knowledgeable about computers and security, and be someone who doesn't let her account get hacked?
re: "He told us Upwork has put his account on hold and the only way to release it was us closing the contracts, releasing the money and giving him 5-star review."
Well, that's pretty manipulative. And wrong in so many ways. So many Upwork ToS violations packed into one sentence. Very obvious: Don't work with freelancers whose accounts have been put on hold. Don't participate in feedback manipulation. Don't release money as a result of threats or weird begging.
This is what I am wondering about:
Did this freelancer get hired, and deliver a bunch of work that the client reviewed and really liked and valued, and so the client was eager to have the freelancer continue working on the project, doing more work... providing more of this programming gold?
Or did the freelancer just repeatedly ask the client for more money, without actually delivering anything?
Or is what happened somewhere in between? The client hired a freelancer to do a project, and the freelancer actually ended up doing that project, but the final total cost was more than the client had originally planned?
No matter what actually happened, it appears that the client was not using the fixed-price contract model as intended.
None of which excuses any dishonesty or fraudulent behavior or unprofessional behavior on the part of the freelancer... And this may very well be a situation in which the freelancer needs to be sanctioned...
But from a "process evaluation perspective," this may not be a case of Upwork's processes not working, but more a situation in which its processes were not followed.
I'm sorry to hear you had a negative experience hiring a freelancer on Upwork. We do have mechanisms for the client to request a refund on a fixed-price project if they aren't satisfied with the work they received. Upwork also offers Dispute assistance, but unfortunately since it's been so long since the contract was paid and closed, it will not be available in this case.
As for the feedback, once both parties leave feedback or 14 day passes since the end of the contract, it's not possible to update it unless the freelancer enables you to update your feedback. Here is more information about that.