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Drawback to freelancing: Chargebacks

Chargebacks: The Biggest Drawback To Freelancing?

Many people have considered freelance work at one time or another. It has many benefits that you can’t get working at an office. You represent yourself rather than a corporation, you can set your own hours, you can be choosy with your clients and you can do it all in your pajamas.

If you’re honest with yourself, however, you might realize that the reality of this type of work isn’t as glamorous as you may have imagined. Remember, you’re giving up a steady paycheck. You can no longer count on a set amount of money every week, as your pay may vary.

Even worse, there are times where you’ll spend hours working on a project, only to find your client is intentionally trying to rip you off. That is most certainly the biggest drawback to freelancing.

How it Happens

Imagine for a moment that you’ve spent hours working tirelessly for a client. It was a big project for you to take on, and you had to push some other work to the side, but the price was right.

After pouring yourself into your work, you finally finish. You check to make sure you didn’t miss any minor details and then send it to your client. Good news: they love it. It’s exactly what they asked for.

Later, you check your account to see that they have made the appropriate payment on time.

Everything is great, right? Not so fast.

This particular client decides that since they are dealing with an individual, rather than a corporation, they don’t have to play by the rules. Soon you look at your account again and the money is gone. Your client requested a chargeback.

It Gets Worse

Losing the money you earned, while your client gets exactly what they requested is bad enough, but it doesn’t stop there. A fee will also be deducted from your account. It’s a standard procedure in the event of a chargeback.

You Have to Fight

In situations like this, you can’t take it lying down, or you’ll soon find yourself in serious financial trouble.

The first thing you’ll need to do is gather up any and all evidence in your favor. This is the main reason you should conduct all business conversations over email (and have a written contract).

Look for emails where you discuss what you are supposed to provide and how you will be compensated. You’ll also want the ones that show you delivering on your end and the client saying they received, and were happy with, what you provided.

It is difficult to survive the chargeback reversal process (these tips can help). You’ll need all the proof you can get if you plan to fight a chargeback. Unfortunately, the burden of proof in a chargeback reversal lies with the merchant (you). If you can’t find written documentation to back up your story, you could be out the money.

The Best Offense is a Good Defense

The best way to handle situations like these is to avoid them all together. Here are some tips for freelancers who want to protect their assets:

  • Don’t blindly accept a new client. Do some research. Browse the company website. Check Ripoff Report and the Better Business Bureau for complaints.
  • Insist on a written contract. Notarized signatures might seem excessive, but if a chargeback pops up, you’ll be grateful for the extra protection.
  • Follow the client’s instructions to a T. If you don’t make any mistakes, there are no grounds for their disputes. And be sure to adhere to all deadlines.

Freelancing is a wonderful career path and lifestyle opportunity. However, there is always some bad that comes with the good. Chargebacks would definitely fall into the category of “bad.” Be on alert for sketchy clients and the fight like crazy if you become a victim.

Have you experienced a chargeback? How did you handle the situation? Sound off in the comment section below!

Featured images:
  •  License: Royalty Free or iStock source: http://www.flickr.com/photos/djwudi/789377273/sizes/n/

Luke Stromer has worked as a freelancer for almost ten years. While he loves the flexibility that comes with his job, he greatly dislikes the financial instability. In addition to completing client work, Luke tries to take the time to help fellow freelancers who might be struggling with the same hardships.