3.7.12

on designers: non-paying clients and refunds

 x

Being in the design field, I work with tons of different types of people. I've probably had at least a thousand clients, and most of them have been great to work with. There are, of course, the select few that like to try to take advantage and are just overall bad clients.

Unfortunately there are some people who seem to think that it's ok to skip out on paying bills or demand a refund after their work has been completed.

When I first started my design business, I took it lightly. I didn't have terms or policies in place because I didn't think a time would come when I would need them. You learn a little something after years of working with people from all over the world: you just never know. Some of the best clients could suddenly turn around and try to screw you.  With policies in place, there is a sense of security... but whether or not the client actually follows them after accepting them is another story.

I just had a PayPal chargeback placed on a job I took on a couple of months ago. If you don't know what that means, basically the client is demanding their money back and PayPal limits my account and holds the amount in a negative balance until they come to some sort of conclusion (which can take up to 75 days). My account is used for all of my business invoicing, and is a super important part of how I get paid by anyone.  Placing a chargeback messes with my entire account, not just the transaction that is 'pending review' by Paypal (so, thanks for that).  It is my first one in years, but also completely against my policies and technically I could threaten legal action.

When a client encourages you to continue working on a design and you tweak that design to their exact specifications, and they sign off on the final revision saying that it "looks great", you don't usually expect things to turn around, especially one month after your last communication. Well, that's what happened. The client has a completely sudden change of heart (even though they have said they were happy with it) and then wants a complete refund for the month of work you completed. Like I said, this is not the first time this has happened, it is rare, but it does happen.

So, how do you deal with it? You be completely up front with PayPal. Provide the evidence they ask from you and hope for the best. In the past, PayPal disputes did not cover services, only products, and I'm not sure if it's still like that or not... It will be interesting to see. It's hard not to feel like a little fish when something like this happens. 

If you take a look at The World's Longest Invoice, you would see that as a freelance designer, this is a completely common practice.  For some reason there are people who think that because they didn't spend their money on an actual product, they are entitled to a refund. They do not seem to realize that time = money, nor do they care that this is your sole source of income and how you pay your bills. Would you work for an entire month at your job and then hand your paycheque back if your employer suddenly decided that he didn't like your work over the past couple of weeks?  This is precisely how it feels when a client demands their payment back from a designer. Not to mention the other jobs that were put on hold while working on a site that will now never be launched.  That website I linked above is actually trying to prove a point and get some sort of law in place that protects freelancers from these things happening. It is very much needed as you can see.

A piece of advice I can offer all of you emerging designers or freelancers is to always accept payment up front. On jobs over $3k I usually offer 50% up front, 50% upon completion. Your clients might have a bit of a hard time justifying this (even though some have no problem dishing out that much on a flat screen tv), but it will save you so much hassle in the end trying to retrieve payments (if the client actually decides to pay you... because that's a whole other story). If you have the skill and the clientele to back you up, they normally have no problem with these terms. You could also offer a payment timeline, for example 25% after the first mockup is done, 25% after revisions are made, and the final payment upon completion. These terms are totally up to you. You can't completely prevent chargebacks after the fact, but at least you have some policies in place.

Don't devalue your work, don't work for free, and as a client, don't expect a freelancer to bend over backwards for you if you didn't even pay for certain services to begin with. Don't assume that you can just request your money back at the end of a project, and don't mess with somebody else's income. Until then, I await the outcome of this chargeback and try to come up with another job to pay the bills that this one helped pay.


By Dana Fox Updated at: 11:43 AM

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36 comments:

  1. Don't work for free is a very good advice, but you'll always risk being screwed when you deal with other people. The world is not fair.

    / Avy
    http://MyMotherFuckedMickJagger.blogspot.com



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  2. wow. that's crazy!! totally unecessary and uncalled for! hope you get everything sorted out quickly and it doesnt cause too much of a headache!

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  3. sorry this happened. people can be so great and some can be SO annoying. having policies in place and getting paid upfront is a good rule but no matter what, some people just suck. i believe in karma and i assume people who do this sort of thing have something not so good in their future :).

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  4. Sorry that happened to you, from what I can see you do great work and I would be so upset if this happened to me.

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  5. I was just putting together a post on this exact same thing. Some people don't understand (or don't care) that if they don't pay their bill on time, then I can't pay mine. My contract now covers disappearing clients and clients who decide they don't have money to pay me once I've finished their design. Hope you get paid for all the work you did!

    Sarah // SillyGrrl.com

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  6. Aw man... That's horrible. Thank you for the insight though!! I will def be referencing this as I work on getting things set up. Good luck! I hope this gets resolved quickly!!

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  7. Oh I'm so sorry to read this, I hope everything turns out ok for you, people can be arses sometimes
    X

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  8. I can't believe people think they have the right to do stuff like that :/

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  9. It's true, design work isn't something you can just return if you decide after a couple of weeks of living with it that you don't like it. People don't understand that. You got what you paid for, someone's time and creativity. You just can't return that. I don't understand why she didn't come back to you if she had suddenly developed a problem with the work that she had okayed. But, then, I don't understand people half the time. I hope you have this favorably decided on your behalf.

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  10. I make my clients pay 100% up front all though I did allow one customer (who was a large business) to pay 50% up front and the rest later only bc I knew and trusted them. Other then that no way. As a graphic designer I work hours and hours much more then 9-5 and I am not wasting my hours a way from my family for free. I have never had a situation like this happen thank God but I have had a few nasty clients. I just had a client who told me what she wanted changed I did those exact things and still she kept having an issue with everything yet did not want to let me in on what it was so I could fix it. I also do not offer refunds as a designer why work all those hours for nothing I do not think so...

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  11. Kinda one of the reasons I gave up photography for other people, and am just using it for myself. I did a wedding once. The bride LOVED all of the photos...and then suddenly, a month later, she was demanding all of her money back and was cussing me out and harassing me and everything. Like you said, complete change of heart. I refused to give her her money back of course. She and her husband didn't even last 6 months, before they were divorced. I felt sorry for the girl...but obviously, she wasn't happy with a lot of things.

    I'm sorry you have to go through this, and that people just straight up suck. I hope it works quickly.

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  12. I am so sorry you are having to go through this, it's pretty messed up. I am thankful for your advice however, this is one of those things I think a lot of people would be too afraid to talk about, not wanting to offend anyone, but these are great words of advice for those running a business and for clients as well.

    I am in the early stages of trying to get my own little baking business started and it's slow-going, but that is perfectly ok with me! I have customers who are more than happy to pay my prices for what I make them and have become returning customers which makes my heart so happy! I also have run into situations where friends want me to make these huge orders for them and only charge them cost. I don't mind helping people out and doing something as a favor, it blesses me to bless them. However, when some of them ask me still "why is it going to cost that much?!" When what I am charging them for cost truly is just that, and not a penny more and cost is literally a small fraction of my normal price I get a little upset by it. They don't understand that the hours and hours that I put in to their product is in fact worth something that I'm not charging them for. Pretty frustrating sometimes.

    I hope this all works out quickly and smoothly for you!! :)

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  13. This sucks. All that work and then some two-faced brat comes along to try to screw you. I wonder sometimes if people understand what they're buying when they request a service. Anyway, I hope it all works out for you and that karma strikes back on those who deserve it.

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  14. Amen, girl. I've dealt with people who will order a specific piece of jewelry, knowing exactly how much it will be, and then demanding that i lower the price when it's done. Although I'm sure it's not the same with web design, I know how it feels to have a customer turn on you unexpectedly. I hope this gets resolved soon! xx

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  15. goo post, dana!! sounds like it can be a really frustrating situation :/

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  16. Such a great post!!!

    I'd like to keep in touch with you.
    What do you say about following each others blog via gfc and bloglovin?

    Let me know! Kisses,

    www.nicoleta.me

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  17. So sorry to read this, I hope everything works out and thank you so much for the advice. xo

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  18. wow..i didn't know it would turn out to be so bad.
    3lin

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  19. Thank you for being so open and honest! I haven't had any bad clients (yet) but I'm still very new. I wish more people knew how very hard it is to be a freelancer with bills to pay. Living on a dream ain't easy, but we love it so we make it work.


    x Jordan
    - Boho Vanity -

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  20. Man, so so sorry Dana! I totally hear ya on all of this. ALL of this. Aaron and I have been through it ALL! Thanks so much for sharing this. Take comfort in knowing that your tales of woe ease the minds of countless others as they see that they are not alone. Love ya!

    xo Jenny

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  21. I co p.etely know what you mean. I am an attorney and while I do not deal with billing or invoicing, I know it is common for clients to dispute their bills. You are so right that people have no problem buying products but do have problems paying for services. But if a service were so easy and not worth paying for, then the picky client should just do it him/herself. Even though I know law, I still completely value the expertise of my tax man, or my realtor, or my future blog designer. ;) Some people just don't understand or appreciate the value of time and expertise. Or they are just plain greedy.

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  22. I'm so sorry that happened to you! I'm a photographer, so it's somewhat the same deal. I get my money mainly through PayPal, since my clients live all over the state. I have been shorted on several occasions. I also did some basic coding for my mom's boss's website, along with redesigning the entire brochure, and we agreed on $300. I was paid $25. Some people live to take advantage of others.

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  23. I'm sorry for this mess. I'm also a designer and have been there. =/ Totally sucks!

    I do hope it turns out in your favor.

    xx
    Jackie

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  24. Yikes, sorry that happened to you! I'm trying to get a client to pay me right now, they're past-due and even though it's only $75 (was one hour of work) it's frustrating! They've been good clients in the past, so I don't know what's wrong with them this time. =\
    I've been using forms from a book and modifying them to suit my jobs. I wrote about the book here: http://eef-etc.com/business-and-legal-forms-for-graphic-designers/ it's pretty handy. I typically charge a down payment to cover any expenses (domain names, server, etc.), 50% after the mockup is done, and 50% after the website is delivered. It's been working pretty well for me, though I have trouble getting clients to understand that once they sign off on the site they have to pay extra for any additional tweaks!

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  25. I'm a graphic design major and obviously, some time soon, I'm hoping to fully submerge myself in to this field so I am grateful for the advice. I really needed to hear 'don't work for free' and not to undervalue your work. That spoke all kinds of truthfulness to my heart. Overall, I am so sorry this happened to you and I hope that it all gets sorted out very soon. Thank you for sharing this experience with us all, even though it's not the sort anyone wishes to have.

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  26. Oh no, that's horrible! I hope it all works out for you. I am a GD student and I must admit this did make me nervous, but I thank you very much for sharing, it is all awesome advice. Best of luck that your problemo is sorted quickly x

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  27. That's horrible what happened to you! I asked a friend a while back to design for my website and it was sort of the other way around for me. She didn't finish my website design and then told me she had to charge me more for things we already discussed were going to be included in the original price. It was annoying. I don't have a shop or offer and sort of service but I can imagine it's annoying. I'm sorry ):

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  28. This is excellent advice!! I'm just getting into freelancing, but it's good to keep in mind that I need to have policies in place for things like that. That really sucks that they can just reach into your Paypal like that and stop things up. I didn't realize that was possible - very rude and uncalled for, so hopefully Paypal will be able to resolve things w/ them shortly. It blows my mind that clients don't realize that they're paying you for your TIME! You spend 20+ hours on something because they paid you to make something for them - just because they changed their mind about it, doesn't mean that you shouldn't get paid for your work. Would they do the same to a cabinet maker or a plumber? So rude...

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  29. It's horrible when something like this happens but it does happen, in every industry sadly. There's always an awkward customer or someone plain out to screw you over. Don't let it get you down. The nice customers make up for the nasty ones xx

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  30. What to say? This is a great post, but I hate to say that because I hate that you had to write it. But to say "this is awful" makes it sound like I don't like what you said - and I do!

    I have not had the same experience, but I have had clients pay their deposit, I finish their design and am ready to install and they just stop all communication. Don't respond to e-mails, tweets, etc. Even though every other correspondence has been positive about their design. SO frustrating! (And yes, deposit price is about to go up. That's a lot of work to do and not get paid for it.)

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  31. oh my gosh i stumbled on this after link hopping on your blog and seriously this just gave me nightmares. as you know i just started a business and stories like this scare the crap out of me! i've tried so hard to prepare for things like this (40% upfront, don't sign till you read the fine print and remind them of the fine print on their order confirmation etc.) but greedy, thankless people scare me. especially greedy thankless brides... so glad you're sharing your stories and advice!

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  32. Love all your posts. In regards to the chargeback you had happen --- that sucks! Chargebacks are messy things, not only for you but the credit card processor as well. I have worked for a credit card processing company (similar to PayPal) and saw a lot of cb's. Across the board, they are all handled the same. In most cases they can be resolved, but it is a long waiting game. When you the merchant sends in docs, those docs are sent over to the bank of your customer. The bank has 60 days to respond or it will expire. It is very common for the bank to wait till the very end of those 60 days to respond. Dumb, very. But the ball is in their court. For lots of credit cards processing companies they are charged hundreds of dollars per chargeback, so it is normal they will charge a fee when one occurs. In most cases a chargeback is because the customer forgot that they bought something, or was unhappy with their product. And most banks will allow a customer to do a chargeback, no questions ask, so sadly, charging credit cards is very risky because of this.

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  33. since its a service, all you need to do is let paypal know that, they will put the money back in your account. I am a GD myself and its happened a few times to me, Called paypal, explained it was a SERVICE and the money was back in my account. The only problems you might have is if the person paid with a credit card, but the one that i did have, i got the money back!

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    1. Oh yes I know this already, but the chargeback was from the credit card company, not paypal. Sucks that paypal just has to do whatever the credit card company wants, but I've received notice from paypal a while ago that they agree with me and are fighting with the credit card company to get my money back. Unfortunately this takes up to 75 days. Ugh.

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  34. Oh man I had to look this up bc I remember you posting this. I am an Etsy seller and always in fear of upsetting one. In all my years as a designer I have never had a big issue THEN it happened. I got a client that expected me to do her work and forget the queue in front of her. Everyday she was emailing me stuff going on her personal life a new problem always OKAY weird? THEN when I was working on hers she goes to paypal her credit card and when they do not take her side she leaves me bad feedback and effected my 100% I had. I just hate people like this that expect artist to work for free.

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  35. When i first started over at sweettweetcreations.com i didn't have any terms either, didn't think i would need it until I had one customer order stationary and party supplies for $150 at my shop..I then received an email from her that she never received her package which i thought was odd..The package was never shipped back and the address was correct. I bluffed and said that I received a shipping confirmation that it arrived, which I was glad because I never heard from her again. She actually tried to get me and demand her money back.

    I was blown that someone would actually lie like that like I seriously didn't put 6 hours in work for that project.

    Let's just say I learned a lot of customer service. and i always have a tracking confirmation.

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