Dec 17, 2018 01:33:23 PM by Ahmed Reda E
I just got another email from upwork about a payment reversal for a job I did way back in Aug!!,
this is not my first payment reversal.
is it really my issue that the platform has bad anti fraud system ??
I was really waiting on getting payed this month, not I'm rethinking the whole freelancing thing.
Dec 19, 2018 05:59:29 AM by Will L
I didn't know it was possible for Upwork to claw back funds from a freelancer four months after payment from a client.
So much for payment "protection," but every freelancer should remember that Upwork says, "Upwork Hourly Protection doesn’t apply to bonuses, manual time, or fixed-price projects."
Keep those projects on an hourly basis, if you can, but never think any payment "protection" is ironclad. Upwork says in its public documents that it loses millions of dollars to fraud every year and you should expect the company will take every opportunity to limit these losses on every project.
Dec 19, 2018 09:34:41 AM by Petra R
@Will L wrote:
1) I didn't know it was possible for Upwork to claw back funds from a freelancer four months after payment from a client.
2) Upwork says in its public documents that it loses millions of dollars to fraud every year and you should expect the company will take every opportunity to limit these losses on every project.
2) You said that before, but I still can't find it, unless you mean the "stuff that wasn't paid" part which isn't quite the same as fraud...
Dec 19, 2018 10:26:06 AM by Will L
A distinction without a difference.
Which of Upwork's public filings with the SEC have you read? I'll tell you which page to find Upwork's losses to fraud described.
Dec 19, 2018 11:20:49 AM by Phyllis G
There is a difference, an important one: It's not UW clawing back the funds, it's the client. As I understand it, UW doesn't prevent it from happening (not sure how they could, in practical terms) but will terminate the client's account because of it.
Chargeback fraud is not a risk that's specific to UW, it can happen in the B&M world, too. It's become rampant among consumers, this is just the B2B variation. It's one more thing FLs must manage as part of their business, specifically in choosing clients. This weighs most heavily on FLs whose businesses are structured around small, one-off projects and high-churn client rosters.
Too many people assume that because UW provides "payment protection" (which actually is quite limited and specific in its coverage), that it also assumes a broader role in safeguarding freelancers' interests. UW doesn't do that, nor does it promise to. We are each on our own here, just as we are off-platform.
Dec 19, 2018 12:07:59 PM by Will L
Well, Phyllis, Upwork specifically claims, "It's pretty straightforward—clients should only pay for hours worked, and freelancers should be paid for their time spent working...an hour worked is an hour paid, and an hour paid is an hour worked."
Chargebacks on credit cards are the price all companies pay for accepting credit cards - all companies, not just Upwork. Based on Upwork's large losses due to unpaid invoices (like money paid out to freelancers that is ultimately not paid back to Upwork by certain clients) is clearly a big problem for Upwork.
I don't know why Upwork can't take a page out of the procedures and policies of companies like PayPal, which suffer fraud-related losses that are modest compared to Upwork's. PayPal says, "We provide merchants and consumers with protection programs on most transactions completed on our Payments Platforms, except for transactions using our gateway products or where our customer agreements specifically do not provide for protections. These programs protect both merchants and consumers from loss primarily due to fraud and counterparty performance."
So, like Upwork, PayPal also has user protections in place. I have used PayPal to send and receive funds, but not enough to know how they treat fraudulent charges. It does appear from its public statements that PayPal handled 7.6 billion transactions with only a fraction of the losses due to fraud of various types.
Dec 19, 2018 12:27:24 PM by Rene K
Outside of the hourly payment protection, when a chargeback occurs it is almost always imputed to the freelancer's balance. Upwork is losing only their fees.
With this in consideration, it is possible that they have found that fighting chargebacks would cost them more than it's worth.
Dec 19, 2018 12:51:56 PM by Phyllis G
Well, Will, I do agree that "chargebacks on credit cards are the price all companies pay for accepting credit cards." The way I see it, the FL is the company accepting the credit card payment, not UW. UW does provide the service of verifying that the payment method is valid, but each of us chooses to accept the form of payment and its associated risks, whatever they may be, when we accept the contract offer. It's no more risky, and in some ways less, than the B&M world. (The Freelancers' Union's "World's Largest Unpaid Invoice" is up in the millions of dollars, a composite of unpaid invoices in increments of a few hundred to a few thousand dollars.)
I can't speak to Paypal's current operations. I don't use it any more because I decided a couple of years ago that their fees are too high and some of their policies border on predatory for an occasional, small-scale user like myself. Not a good fit, so I've found alternatives.
UW is a completely different kind of business than Paypal. In any case, if UW got into the fraud-protection business, it would have to raise fees significantly. As someone who doesn't look to UW for that kind of protection, I'd feel kind of screwed. Maybe that could be a premium feature for those who want to pay higher fees, or a monthly flat fee, or something. Leave the rest of us alone, please.
Dec 19, 2018 10:59:18 AM by Will L
OK, Petra, to save time, I’ll assume you haven’t read all Upwork’s public filings. Or you haven't read them very closely.
Here’s one place (there are others) where Upwork gives the information you say you cannot find. On Page 21 of its 10-Q filing with the SEC for the quarter ended 30 September 2018…
…Upwork discloses a Provision for Transaction Losses during the quarter of nearly $1.9 million, which was 57% of the company’s total operating loss for the quarter. This provision was only $1.1 million in the same quarter of 2017, so something big has changed in this particular part of Upwork’s operations over the past year.
This is just for one three-month period. If the situation doesn’t change, the full year charge will be well over $7 million – a significant amount of money for most companies.
On the same page Upwork explains that this, “Provision for transaction losses consists primarily of losses resulting from fraud and bad debt expense associated with our trade and client receivables balance and transaction losses associated with chargebacks. Provisions for these items represent estimates of losses based on our actual historical incurred losses and other factors. As result, we expect provision for transaction losses to vary in future periods.”
Before you get into another potato-potahto train of thought that “bad debt expense” or “transaction losses” are not a type of fraud, think again. Not paying one’s bills (creating “bad debt expense”) is a form of fraud. Chargebacks Upwork creates are due to clients or others who owe Upwork money not paying their bills, which is also a form of fraud.
How do I know this?
Because Funk & Wagnall’s defines fraud as, “deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage.” (Actually, that’s according to Dictionary.com, but I really like the name Funk & Wagnall’s.)