Guru - Escrow Services, Work Tracking Systems and Payment Guarantees
Guru has an escrow service called SafePay Escrow that is most often used for fixed rate project, but can also be used for hourly ones as well. SafePay Escrow uses a standard escrow model: the client puts the money into escrow, the contractor is notified that Guru has the funds and does the work, and the client releases the funds after receiving and reviewing the deliverables. This helps solve the trust problem that makes it difficult for clients and contractors who don’t know each other to work together.
However, the mechanisms behind the use of this escrow service are a bit different than on some other sites.
Guru’s escrow setup is somewhat unique in that the entire feature is driven by the contractor. Clients are not asked whether or not they want to use escrow, so this is not specified in the project listing. Contractors don’t even ask for the use of escrow while bidding. Escrow doesn’t enter into the picture at all until a project is awarded, at which time the contractor makes the decision about whether to use it or not.
If the contractor does want to use escrow, he or she creates an escrow request and sends it to the client. Guru does not specify clearly whether a client is allowed to refuse an escrow request if he or she doesn’t want to use SafePay Escrow. However, a client could effectively refuse this even if it were proscribed, by simply not depositing funds for the escrow. In practice, I would imagine these incidents are rare, since the client pays nothing for the escrow service and would risk losing his/her chosen provider by refusing to agree to use of the service. However, I can imagine that some clients may be reluctant to agree to use escrow because they don’t want to pay anything up front, even to Guru itself.
Assuming the client does agree to the use of escrow, he or she funds the escrow account for the project, and the contractor is sent a notice indicating that the escrow funds were submitted and that work can begin. The contractor does the work and when completed, submits the deliverables to the client. Once the client is happy with the work, the contractor must take the extra step of requesting the release of funds from escrow, which sends a notice to the client to allow the client to send a matching request to Guru. Funds are then released from escrow to the freelancer’s account.
Since Guru allows projects to be set up with multiple deliverables and payment milestones, it is possible to use escrow in a phased manner. The client and contractor can agree to have each milestone’s value funded in escrow and then released when the milestone is successfully achieved. Both client and contractor have software tools to allow them to keep track of funds escrowed and released.
Guru does not make any sort of explicit guarantee of payment to contractors who use SafePay Escrow. However, using escrow grants access to Guru’s mediation and arbitration services at no extra charge. This provides protection to freelancers against situations where they work in good faith and the client simply refuses to pay.
Contractors must pay an extra 2% transaction fee in order to use SafePay Escrow. This is added to the 5% or 10% project transaction fee that is applied to all payments made from client to contractor, at the time the money is released from the escrow account.
Guru says that this 2% fee covers the cost of both the escrow service itself, and also mediation and arbitration services mentioned above. This strikes me as reasonable, but the extra cost is a temptation for contractors to try to save money, which puts them at risk of being ripped off by unscrupulous clients. My guess is that a large percentage of Guru contractors have no idea that escrow is required in order to get any help in the event of a non-paying employer. The need to take a special extra step to request escrow also means it is probably skipped by many new providers who don’t realize they need to do this—I know that was the case with my first project.
SafePay Escrow also does not provide full protection against chargebacks made by clients. Guru will protect against contractors in some cases, but not others; this is discussed in full in the section on dispute resolution. In a similar vein, I also strenuously object to Guru’s policy of notifying contractors that escrow has been funded when the only money deposited is a check that has not yet cleared. This is an open invitation to abuse, and I’ve been the victim of it personally.
There is no dedicated work tracking system or payment guarantee for hourly work on Guru, like the systems found on Elance or oDesk. This is likely due to the relatively small number of hourly projects on Guru, and the fact that the company treats hourly projects in pretty much the same way as fixed rate ones (the two sites mentioned above have very different systems for dealing with hourly and fixed projects).
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