Freelancer.com - Dispute Resolution and Arbitration
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If the automated resolution system doesn’t work, the parties are allowed to request arbitration of the project. Client and contractor are given seven days to upload all of the evidence that they feel supports their position in the dispute (such as communications logs, work product, and so forth). An arbitration fee of 2% of the value of the milestone payment (minimum $10) is calculated, and the client and contractor must each pay half this amount for arbitration to proceed.
Assuming the fee is paid, Freelancer.com will look over the evidence and make a decision within 14 days about which party should receive the funds. Unlike vWorker, which also does its own arbitration, Freelancer.com provides no guidelines or details about how this decision is made. Thus, it is presumably a matter of someone at the company trying to get a handle on what the project involved, and then making a judgment based on the evidence provided. The company’s decision is final, and is used to determine the disposition of the disputed funds.
I have not had the opportunity to use Freelancer.com’s arbitration service, but I have done some basic research and have not found any evidence to indicate that there are widespread problems with it. I’m sure that the company does its best to be fair about the process, getting it right most of the time, and messing up some of the time.
I commend Freelancer.com for offering the arbitration service at all, and making it available at a very reasonable cost. Consider competitor Elance, which in most respects aims at a higher segment of the freelancing marketplace, yet selfishly punts on the arbitration issue by forcing the two parties to pay very high fees to use a third party arbitration service. When a project is worth $200, having the parties pay $10 to have an arbitrator decide what to do with that payment is reasonable; forcing them to pay $198 is not.
Freelancer.com does not provide specific financial protection against chargebacks filed by unscrupulous clients. I’m sure the company does its best to avoid this happening through various verification policies, but the bottom line is that if you are paid for a project using funds that a client charged to a credit card, and the payment is later charged back by the credit card company, Freelancer.com will take the money out of your account.
If this makes you feel insecure about just how safe payments are on Freelancer.com, then that’s for good reason. Chargebacks are not very common, but they aren’t exactly rare, either, and if they occur you will be on the hook, not the site. This is in fact the case for most marketplace sites, and their users don’t even realize it (Elance is a commendable exception in this regard).
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