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Help? Client is demanding a full refund?

Thread title: Help? Client is demanding a full refund?
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02-03-2012, 12:25 AM
#1
Matt Brighton is offline Matt Brighton
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  Old  Help? Client is demanding a full refund?

Hey There

I have worked with loads of people for graphic and web design projects, for my safety and theirs I always make us both sign a contract that outlines things like delivery, cancellation policy and what happens as far money goes if something goes pear shaped.

I have had a client who paid me a deposit of $80 last week for a web design and development project - I started the project and sent over a preliminary mockup to him, he instantly didn't like it and without reason or understanding that it was no where near finished - he started demanding a full refund. I sent him a polite offer back saying its a difficult situation because 9 hours had already gone into the project. By giving a full refund, this guy has just wasted a full days work that could have been spent on other clients and projects. He was a polite guy so I mailed him saying I'm prepared to offer a 50% refund due to the fact many hours have already been spent on the design.

Basically he's said that's totally unacceptable and he is now threatening to contact PayPal and take it further.
I've never actually had a dodgy client until now - I should have picked up on this a little earlier because he has a company based in the US yet he paid me on paypal from his sisters account? Which I found a little strange but put a blind eye to it and kept going onwards.

He's digitally signed a contract that states the following for cancellation


Cancellation.
Both parties understand that Client or Designer may terminate the service at any time if, for
any reason, the relationship is deemed unsatisfactory by either party. Upon written or verbal cancellation,
Client is responsible for payment for all expenses incurred and any work done toward the completion of the
project based on the percentage of project completed. Should Client cancel the project following its completion,
Client is responsible for full payment as per the above estimate plus all other expenses incurred.
I just want to check that I'm definitely safe with this?

Thanks
Matt

02-03-2012, 12:34 AM
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Village Genius is offline Village Genius
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I'm not a lawyer but it looks good, he is clearly bound. You actually have grounds to sue him over the difference (although that seems a little impractical). Let him take it to PayPal and show them the contract. PayPal is unpredictable with their claims service but if any real look is taken at it you will win.

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02-03-2012, 12:53 AM
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That is what is running through my head. I'm not a lawyer myself and nowhere near one for that matter but the contract covers a lot from milestone payment, cancellation, approval, confidentiality / NDA etc..

I'll let him escalate it and show them the contract, show I have reasoned on my side for a generous settle that he has declined. I don't want to risk loosing my paypal account as I know its possible in these situations.

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02-03-2012, 03:08 PM
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I think him using his sister's account may muddy the water some. Is this not a violation of PayPal's rules?

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02-03-2012, 05:40 PM
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If it was an authorized payment, no. If it was not authorized he is liable for criminal charges.

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02-16-2012, 12:30 PM
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Originally Posted by Village Genius View Post
I'm not a lawyer but it looks good, he is clearly bound. You actually have grounds to sue him over the difference (although that seems a little impractical). Let him take it to PayPal and show them the contract. PayPal is unpredictable with their claims service but if any real look is taken at it you will win.
I am.



A verbal contract is as legally binding as a written one...

That being said, unless you have a witness or it in writing, you have no chance of winning as it will be based on hearsay and conjecture.

If he raises a Paypal complaint you have less than no hope as their complaints are 90% automated with "non-physical" items being directly excluded from their Terms Of Service.

Paypal very much works on a "first to complain wins" basis for non-physical items.

02-16-2012, 12:31 PM
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If you haven't read Paypal's terms of service, it's kind of your own fault.
They don't put them in place because they look nice.

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02-25-2012, 12:39 AM
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That being said, unless you have a witness or it in writing, you have no chance of winning as it will be based on hearsay and conjecture.

If he raises a Paypal complaint you have less than no hope as their complaints are 90% automated with "non-physical" items being directly excluded from their Terms Of Service.

Paypal very much works on a "first to complain wins" basis for non-physical items.

Your interpretation of Paypal's dispute resolution process is completely inaccurate. In fact, it's the complete opposite.

@Matt - I see that this happened a few weeks ago so I'm not sure if it ever went to dispute or not. In any event, Paypal will typically side with a seller 9 times out 10, when it involves virtual/intangible goods. So, whether you even have a "contract" or not isn't the issue as far as PayPal is concerned. They have no desire to be in the business of reading third party contracts. You should win this so long as you make it clear to PayPal that you delivered SOMETHING for the buyer's payment to you. That is the key here. You must show reasonable "proof" that you completed AND delivered a design. This can prove difficult when it involves intangibles, which is why they typically take the seller's side, regardless whether it's to the client's satisfaction or not.

If it falls to dispute, then I'd recommend uploading screenshots of the time stamps of the email that had the attached mockup and upload the mockup itself, during the dispute. I would also include any other "evidence" that may support your case, such as other emails, ip address, specific links, forum threads, etc. I know it sounds harsh, but sadly Paypal isn't interested in whether your client was happy with an intangible service. They just want to make sure he received something. With paypal being the most popular payment processor for virtual services, can you imagine how many disgruntled web hosting clients paypal has to deal with on a daily basis? Exactly. This is why they don't typically like to side with the buyers of virtual goods in most cases. It's too messy. There are strong cases where the buyer wins, but that is not nearly as prevalent. That being said, if they suspect that you are committing fraud by not delivering a service for payment, then they will return the money to the buyer and either freeze your account, or closely monitor you from that point forward. That is the standard treatment given to real fraudsters who coincidentally are terrible communicators more often than not. Paypal hasn't grown to the size they are by being stupid and clueless.

There are two exceptions to the above:

1.) Was your client's payment made with paypal funds, or a credit card via paypal? If the later, then you can kiss your money, mockup and time goodbye if he ultimately requests a chargeback directly with his bank/credit card company.

2.) The only downside to what you've stated above, is that you already offered to return half of your client's payment. From Paypal's perspective, this will automatically signify some type of "fault" on your behalf, to some degree, and you can be sure that your client will use those emails to his favor. So at this point, I'm not sure if paypal will actually return 50% of his money if you "win". They typically are "all or nothing" when it comes to payments; otherwise their job becomes too complicated. My advice is that if this ever happens in the future, stand by your terms when you get a client who acts up. Don't play so nice. It's your time and talent. This is business. No refunds should ever be given to a client after they have your design, software, or logo in their possession or your service has been completed. Otherwise it is theft since it's virtually impossible to "return" these "items".

I was in the freelance web design business for over 10 years and have had to deal with a few random clients attempting to steal my designs and logos, so I am very familiar with how this process works. Now, tangible items are a whole different can of worms.

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