Guru - Dispute Resolution and Arbitration
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Guru offers a two-stage service aimed at resolving conflicts that occur between clients and contractors. The first step is mediation, in which a third party mediator (who works for Guru) is assigned to try to help the client and contractor resolve their issues amicably. If this fails, the second step is arbitration, where a Guru arbitrator reviews the project details and determines whether funds should be released to the contractor, returned to the client, or split between them.
Guru only offers dispute resolution and arbitration services on projects where SafePay Escrow has been used to deposit funds to an escrow account at Guru. If a contractor agrees to work without SafePay Escrow and the client subsequently refuses to pay for the work, he or she is out of luck. (Been there, done that.) Similarly, if a client pays for work up front and then is not satisfied with the deliverables, again, Guru will not help.
Guru does not charge any extra fees for dispute resolution or arbitration. However, the 2% fee for using SafePay Escrow effectively represents an indirect cost. In effect, this is a form of insurance: in order to be sure that mediation and arbitration will be an option, you have to give up 2% on all payments, even in the majority of cases where these services aren’t needed. The end result is that Guru actually charges quite a lot for its dispute resolution process—arguably even more than Elance’s notoriously high fees.
Here’s what I mean. Guru states that only 3% of escrowed projects go into mediation, and only 0.5% go to arbitration.. Let’s say the average project is worth $200. If as a contractor you use SafePay Escrow every time, you are giving up $4 per project. If you end up needing mediation 3% of the time, this means you are effectively paying over $130 per mediation event—not exactly chicken feed.
Of course, not paying the 2% means that you get no help at all from Guru, and my guess is that the chances of being ripped off if you skip escrow are much higher than 3%. It’s also important, when comparing to Elance, that much of the problem with Elance’s $99 or $199 fees for arbitration are not so much the cost itself. The issue is more that even if you’re in the right, paying $99 to get an arbitrator to reward you $100 or even $200 is painful. With Guru, you pay on every escrow project, but once you’ve paid, the service is there if you need it with no extra costs, and the client can’t use a high arbitration fee to try to keep you from getting a payment you’ve earned.
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