Their tool is a spyware. They eat 20% of all their freelancers earnings and it's up to them to verify the client credit cart and identity so they should do better and cover this. What is worse is that it took then 2 years so the freelancer possibly paid taxes and withdrawing fees. Fraud sucks but I don't think someone should be able to make a refund years past an event. Due time is important.

It's utterly ridiculous. If you want to be the 'merchant of record' then you absorb the risk, it's that simple. What tool gets used has nothing to do with that, then they need to improve their KYC work.

>It's utterly ridiculous. If you want to be the 'merchant of record' then you absorb the risk, it's that simple.

Are you saying that as something to aspire to, or something that's standard practice? I don't think most people would have a problem with bigcorp absorbing the risk, but in practice most e-commerce platforms pass the chargeback risk to their sellers.

It is the expectation they create, by taking care of the drudgery of having customers Upwork puts itself in an excellent position to reap a chunk of the turnover of the freelancers they put to work, but it also puts the onus on them to ensure that customers pay their invoices and do so promptly and properly.

Note that there is absolutely no dispute at all about the work being performed or the quality of the work, and if there was they might have a leg to stand on, even if that came to light this long after the fact (though, again, that would point to some process errors at Upwork).

The responsibility of payment processing and due diligence with respect to which customers they do business with and how they arrange the various payment options lies entirely with Upwork. In this case Upwork is the seller. They buy the product from someone else and that's two separate relationships, Upwork now suddenly wants to pretend that they weren't part of the transaction after all and that the relationship ran directly from buyer to their supplier but that isn't the case.

> They buy the product from someone else and that's two separate relationships, Upwork now suddenly wants to pretend that they weren't part of the transaction after all and that the relationship ran directly from buyer to their supplier but that isn't the case.

Upwork asserts that they own the relationship between client and freelancer/agency, to the point that freelancers or agencies must pay Upwork thousands of dollars if they want to move their client off of Upwork.

Upwork would presumably say that freelancers who don’t use the Upwork tool are deciding they’d prefer for Upwork to not be part of the transaction. In particular this seems unambiguously right for “service not delivered” chargebacks, where managing chargeback risk kinda requires being able to prove that the services were performed.

That's a pretty weird reading of the concept of the gig economy. Upwork clearly wants to own the customer relationship, which is why they do what they can to avoid being cut out of the deal. In a world where Upwork would be happy to be compensated by freelancers invoicing customers directly for work found through Upwork you'd have a point, but that is not the world we live in. Upwork processes the payments, and both clients and freelancers are aware of this and that Upwork takes a cut for providing the matchmaking and process services they offer.

Service not delivered is normally dealt with by services like Upwork through escrow like arrangements or review procedures where the customer will only pay for approved work. Upwork chooses the second method, which means they have all of the control they need to ensure that freelancers only get paid if they deliver, substantially reducing the risk of such chargebacks.

And if these do happen, then the problem, again, lies with Upwork and the fact that they choose a payment method that offers that possibility. They could choose wire transfer instead if they were concerned with customers charging back after approving the work.

It's not a one-sided problem. They could do wire transfers, but that would be a substantial cost for their client side users, since most (American) banks charge $20-30 for outgoing wire transfers. It's not obvious to me why avoiding chargeback issues should dominate all other concerns, as bad as it is.

I think the point is the insecure payment method was Upwork's decision (they don't even allow their freelancer to propose an alternative their own payment solution) as was accepting the stolen card; risk management of non-reversible payments has a cost too, but that's a decision Upwork made. The only security decision the freelancer made was not to use Upwork's spyware. Which would give Upwork valid reason to default to siding with the client over the freelancer in the case of a dispute about completed work, but not to demand a freelancer reimburse them because Upwork had chosen to accept reversible payments with a stolen card and couldn't easily recover funds from their client after the chargeback.

Apparently the cost of credit card processing amounts to $12.5K, on account of something that the freelancer could not have been aware of. The thing to watch for is whether Upwork improves their processes on account of this happening, changes their terms of service (supply side) changes their terms of service (demand side) or does nothing at all. That will tell you all you need to know.

Credit cards also have fees. When you start talking thousands of dollar transactions CC start being more expensive.

At 1000 dollars 4% is $40.

Then Upwork would have no claim to a violation of their TOS. Upwork can't choose between protections and risk.

> We continued working via Upwork while locating in Zurich, as to not violate any Upwork terms.

If that’s the case I would expect Upwork to charge a lower fee when freelancers are not using the tool

There are different types of platforms:

If you sell something through Amazon and the buyer commits fraud, Amazon will still pay you provided that it was credit card fraud.

If you sell something on your Shopify store and integrate with Stripe, you are responsible for your KYC, and will have to take a loss for fraud.

The former takes a larger percentage of your sale for handling KYC, while the latter lets you keep more, but you're responsible for KYC.

The problem with Upwork, Airbnb, etc. is that they act like the merchant of record but not when it comes to fraud. They try to pass that onto the seller.

Generally, in the payments space, the “merchant of record” is who the banks go to with chargebacks and disputes. I haven’t heard of this as an industry standard.

Large platforms where the customer thinks they are paying the platform, such as Lyft or Uber, take on the chargeback risk. Etsy, Shopify, and others where the customer is paying a vendor tend to pass on the fees to the vendor.

Ultimately, it’s up to the platform how they want to handle this. It’s most likely listed in the terms of service.

I don't disagree (nor totally agree) with your opinion about the matter. But they don't take a 20% of all their freelancers earnings, they take 20% on the first $500 of your per-client earnings, then %10 of the next $9500, then %5 of any more work with your client. Also, you are free to work with any client outside the platform 2 years after you start work with them.

True.

And therefore when there's a chargeback they take 20% of the hit.

He needs to go after the thief. Upwork certainly ought to help with that, rather than trying to get the bank to not do the chargeback and screw over the fraud victim after all.

> Even so, my initial sympathies were with the freelancer. But then I looked at the main page of his website. he is a "Blockchain & AI Focused Tech and Investment Consultant"

Whilst I have little time for the crypto world, this is totally irrelevant. They were using a large & popular freelance platform for legally acceptable work and the exchange of fiat currency for billable work. People use platforms like Upwork in the (often mistaken) belief that it adds a layer of trust and safety to a working arrangement, including billing.

I think it is relevant. If you work for crypto scammers, problems are more likely. If you work for normal clients, via upwork or some other way, problems are less likely.

Upwork handles payment. The freelancer has no ability to verify the card used for payment.

If you work for "crypto scammers" just take partial or complete payment up front, in crypto which can't be retroactively taken from you.

tbh he might try not to pay back anyways, but they might close his upwork account, so the payment method is irrelevant here, isn't it?

>anybody working in the cryptocurrency space should vet clients very carefully given the high level of fraud and insanity in the space.

Normally I'd agree, and I'd just flat out refuse to do crypto work for people over Upwork.

But these payments came over the course of two years. After the first few settle, I can't blame him for assuming everything is hunkydory.

What's insane is that the bank is letting someone do chargebacks going back two years.

How do we know they did chargebacks for two years? I see 6 items, which I'm guessing is the 6 months that my card issuer limits chargebacks.

If that's the case, then the freelancer could still be well ahead on his slice of the credit card fraud.

Even if track time with their tool Upwork can take money back from you. I’ve witness the case where client paid $40k with Amex card and then chargeback. Poor freelancer lost $40k because Upwork took that money from his account as soon as it saw chargeback from Amex.

It's not a time tracking tool per se. It counts keystrokes, mouse swipes, takes screenshots, and so on. It's a spyware nanny cam.

https://www.buzzfeednews.com/article/carolineodonovan/upwork...

> It's very hard for Upwork to tell the difference between this and a conspiracy between freelancer and client to steal money from a credit card.

I agree that it's hard to tell the difference, but do not believe that gives Upwork the authority to require a refund from the freelancer. The freelancer made an agreement with Upwork that, in exchange for payment from Upwork, the freelancer would perform work as directed by the client. By requiring a refund, Upwork is claiming that the freelancer either (a) did not perform work as directed or (b) is conspiring with the client to scam Upwork. In the case of (a), the client may give evidence against the freelancer. In the case of (b), the burden of proof lies with Upwork to prove that such a conspiracy existed, not on the freelancer to prove that no such conspiracy existed.

Upwork has four ethical options going forward. First, Upwork may accept the cost of fraud as a part of doing business, and continue working with this freelancer. Second, Upwork may accept the cost of fraud as a part of doing business, but limit that cost by refusing to hire this freelancer in the future. Third, Upwork may recover payment from the client through the courts. Fourth, Upwork may accuse the freelancer of being part of the client's fraud, and may recover payment through the courts. Instead of taking any of these options, Upwork has chosen the unethical option to require payment from the freelancer without first establishing any culpability on the part of the freelancer.

> he is a "Blockchain & AI Focused Tech and Investment Consultant" specializing in "investments related to Blockchain, Cryptocurrency, Fintech, Artificial Intelligence". It seems to me that a) somebody claiming this level of business sophistication should be walking the walk, and b) anybody working in the cryptocurrency space should vet clients very carefully given the high level of fraud and insanity in the space.

I agree, considering Blockchain and Cryptocurrency as realms of unmitigated fraud whose entire existence consist of nested pyramid schemes. However, I do not think that establishing a precedent allowing abuse of a power differential in somebody's livelihood is acceptable, even when the victim is part of the larger Blockchain/Cryptocurrency scheme.

> So I think what I'd really like to see here is Upwork saying, "We're very sorry the client screwed us all over and we suggest you consider suing them to get paid. Have your lawyer contact us and we'll turn over any records you need to that end."

Except that the freelancer's agreement is with Upwork. The client screwed over Upwork. A bank is responsible for verifying the identity of somebody accessing an account, and may not pass on the costs to the account holder. Upwork is responsible for verifying the identity of a client's payment, and may not pass on the costs to the freelancer.

> The freelancer made an agreement with Upwork that, in exchange for payment from Upwork, the freelancer would perform work as directed by the client.

Do you have proof of any of this? I'd bet cash money that everything that happened here is entirely covered the actual agreement.

> gives Upwork the authority

It is the rules Upwork sets that gives it the authority, rules everyone agrees to before entering in a relationship.

Contracts are constantly litigated and various terms get struck all the time. It’s not that everyone agreed with Upwork that gives them control it’s the near impossibility of litigating amounts in question without losing money. Upwork in the other hand has extreme incentives to make these terms stick because they have a lot more at stake than just ~12k.

The time tracking is to protect the client from the freelancer scamming. Time is not even being disputed here. Upwork is handling payments, and taking 20% fee for that risk (as I recall), so they need to eat it when they screw up by allowing payment with an unauthorized card. There is nothing the freelancer could do to know that payments are valid, because upwork is supposed to do that.

The actual problem is that chargebacks are possible when using credit cards, and chargebacks are possible because of the legal concept of card fraud (i.e. the person holding the credentials could actually not be legally "authorized" to realize the transaction), and the legal concept of card fraud exists mainly for two reasons:

1. Banks are bad at security.

2. People are bad at security.

3. The responsibility in the case of fraudulent transactions is not clear. Who is to blame? The bank or the user?

Cryptocurrencies either solve these problems or neutralize the negative consequences of these problems:

- There is no bank to impose dumb security rules

- When credentials are "stolen", the user has no one else to blame than themselves.

- There's no concept of fraud. Whoever holds the credentials (private key or nmemonic seed) is authorized to realize transactions using the credentials.

- There are no chargebacks. Once a transaction is confirmed, the receiver can be certain that their money is not going to get pulled back.

Shifting all liability to users ("the user has no one else to blame than themselves") is probably one of the most anti-consumer moves ever. Especially in the context of digital credentials that people do not know how to secure and for which good usable security mechanisms do not exist.

Also, what happens in transactions where the seller does not deliver the right item? What if I buy a laptop off eBay, but I receive a box of rocks instead?

> Banks are bad at security.

I disagree. I live in Europe and all my online card transactions over a nominal sum (~$10) are tied to a certificate-based security application that requires confirmation on my phone. This same application is used by all banks and most government entities.

There are of course banks in the world that are bad at security, but “banks”, as a general term, most definitely are not.

The fundamental problem is, of course, that security is annoying, so any fundamental security improvement to online banking needs to be mandatory and centralized, and if there is no will to push something like that I’m not surprised nothing happens.

So you are saying that cryptocurrencies are better because if I get scammed I have zero recourse to get my money back? Wow. And I was wondering why this modern marvel hasn't taken the payment industry yet.

Charge backs are not only intended to solve card fraud. It's the most convenient tool you have as a buyer to deal with seller fraud. If you have good evidence, you can win them consistently.

zero recourse transactions sounds like a nightmare. screw everything about that

> Have your lawyer contact us

That alone would cost several thousand dollars.

Upwork should provide free lawyers for incidents like this as part of their package.

There may be an arbitration agreement in their EULA, and that may allow them to settle this more cheaply than using lawyers.