oDesk - Escrow Services, Work Tracking Systems and Payment Guarantees
(Page 3 of 3)
No Escrow System for Fixed Rate Projects
This is normally the place where I provide a summary of what I call the Internet trust problem: clients and contractors who don’t know each other are each reluctant to “go first” in a transaction, because of the risk of the other side not following through. And then I typically mention that to help alleviate this problem, the freelancing site has implemented an escrow system. Such a system lets the client deposit money with the site so the contractor knows it is there to pay him/her when the work is done, while the client has protection against being ripped off, because the contractor can’t access the money unless the work is satisfactorily completed.
But I can’t write any of that, because oDesk is the only major freelancing site that has no escrow system. In fact, it’s even worse than just that: oDesk also provides no support or assistance whatsoever for dealing with issues between clients and contractors on fixed rate projects. There’s not only no escrow, there is no dispute assistance, no mediation, no arbitration, no nothing. If you agree to hire or work for someone on a fixed rate project on oDesk, you’re on your own.
As I said in the payments discussion, there is the possibility of using an advance payment. However, as I also mentioned there, an advance payment doesn’t really solve the trust problem at all: it just puts both sides at risk instead of forcing one side to bear all of it. Suppose a client and contractor agree on a $500 project, with a $250 advance payment. In this case, instead of the client laying out the full $500 and hoping he gets good work done, or the contractor doing $500 worth of work and hoping she gets paid, they’ve split the risk. However, neither really has any protection against being ripped off—they are just both risking being ripped off by half as much! The client could still have the contractor disappear with his $250, and the contractor could still end up doing the work for half of what she thought she’d be paid.
The fact that oDesk refuses to implement an escrow system and basically absolves itself of any responsibility in fixed rate projects serves to pit contractors and clients against each other. The company has to tell contractors to consider asking for an advance payment because otherwise they are working with no safety net whatsoever. At the same time, it also must warn clients that they are risking losing their money if they agree to an advance payment! oDesk not only doesn’t resolve the trust issue, it arguably exacerbates it.
The net result of oDesk’s policies is that advance payments are far more normal there than on sites that have escrow, such as Guru or Elance. That’s not a good thing. Speaking from personal experience, oDesk is the only site I’ve ever used where I routinely asked for advance payments; I’ve never done so on vWorker, Elance or other sites with proper payment safety mechanisms. I don’t like advance payments, but really felt like there was no other viable option, especially when a client had no track record.
oDesk’s stubborn refusal to properly support fixed rate projects brings to mind the traffic congestion issues in my hometown. The city has been growing for many years, yet has an utterly inadequate system of highways, which causes them to be clogged with traffic nearly all the time. (I can remember routinely getting stuck in bumper-to-bumper jams at 11 pm on a Saturday!) Yet, every time a proposal is made to add new highways, politicians balk. Why? Well, they want people to use public transit, and they figure that if they make traffic flow more smoothly then that would be less incentive for folks to use buses and subways. Of course, this doesn’t work: many people simply cannot or will not use mass transit, so they stay in their cards, and the traffic problem gets worse.
oDesk seems to be the same way when it comes to fixed rate an hourly projects. I understand that the company really wants to push hourly jobs with its “virtual workplace” model, and maybe they’d prefer that fixed rate projects would just disappear. But the reality is that they aren’t: there are still thousands of them posted on a weekly basis. Making fixed rate projects dangerous isn’t making them go away, it is just leading to frustration and rip-offs.
In my opinion, oDesk allowing fixed rate projects to be listed but then providing no support for them is unacceptable. If they really want to be an online virtual workplace with everyone billing work hourly, they should just bite the bullet and get rid of fixed rate jobs once and for all. If they do think fixed rate projects have a valid place, then it would not be difficult for them to implement an escrow service, especially considering how much money they are taking in every month. Right now they are trying to have their cake and eat it too, and I find that unjustifiable.
Yeah, you probably figured that out already by now, but I had to be explicit. :)
Home - Table Of Contents - Contact Us
The Online Freelancing Guide (http://www.FreelancingGuide.net)
Last Site Update: May 18, 2011
© Copyright 2001-2011 Charles M. Kozierok. All Rights Reserved.
Not responsible for any loss resulting from the use of this site.