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on designers: non-paying clients and refunds

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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.


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Dana
I am a country loving Canadian with a mind that never sleeps. When I'm not running the Wonder Forest blog ship, you can find me creating artwork for phone cases and home decor, whilst managing the daily tasks of Dana Fox Creative. Visit me at the links below if you wanna be friends and follow along on Snapchat: wonderforest.

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June 26, 2012

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