Dealing with Client’s False Refund Claim
This story is about a situation I went through during June – August of 2016.
In this post, I am going to discuss my experience with one of my client who claimed a refund of the money he paid me via PayPal for the e-commerce website project work that I did for him.
I am going to discuss how I handled the situation and got out of it after winning the case with PayPal as the jury between us.
This approach is going to be helpful for you if you are dealing with clients like these and it will make sure that your time and efforts don’t go waste with such reckless and unappreciative clients.
So let’s begin the story with a little bit of background. During my initial years of freelance and remote work with AuctionProTemplates.com, we had a client who came to us for a custom eBay storefront and product listing design and development work. This was sometime during the summers of 2014. I worked on their eBay Storefront and Product Listing design and development and helped them launch their products on eBay. They were quite happy and satisfied with the work.
Over the course of the year, they began seeing growth in their sales on eBay and during the March of 2015, they realized that they needed professional help in managing their growing eBay business, so they came back to me requesting to help them with their eBay storefront.
We agreed on a monthly payment that I would invoice them at the end of each month for the work that I do for them and this began my continued business relationship with them.
Over the course of a few months, they started seeing more growth in their business and were pretty impressed with my consulting and the fact that they had access to my expertize whenever they needed. Impressed with my work they wanted to further expand their business and had an idea of launching a full-fledged e-commerce website.
They shared this idea with me and discussed the prospects of me helping them build this e-commerce website for them and asked for the quotation for the development work of this site.
I sent them a proposal with the estimate of USD 6,714.60 for the development work. They instantly accepted my proposal and moved on to discuss the payment terms with me. We agreed that 50% upfront deposit would be sent to me in a couple of days to kick start the project and the remaining 50% deposit would be sent once the site is ready for transfer to their hosting.
I started the project work in October of 2015 and was ready with the site by January after all revisions, modifications and all essential feature integration that they required.
After having showcased the site to them on a staging area, I sent them my final 50% payment request. There was a bit of delay with this payment as the client began sending me excuses every now and then citing some business reorganization they were undergoing. I thought this was just normal as is with every other business never knowing there was something else cooking in there.
Never the less they paid my final 50% invoice in the month of March after several email requests.
After receiving the final payment, I sent out an email thanking them for the same and also informed them that I was ready to transfer the site to their hosting as and when they required me to do it.
They responded that they will get back to me on this in couple of weeks. Meanwhile, I continued working with them on their eBay storefront and product listing helping them manage their eBay store.
During the next couple of weeks, I received no communication from them asking me to transfer the newly built site which I was expecting. I wrote them again to which they responded that they are undergoing some internal business re-organization and they would get back to me on this later.
I was okay, with it as they had already paid for the work I had undertaken for their project.
In the month of June 2015, I received an email from them which said that they wished to relieve me of their regular eBay work as they had hired a full-time in-house person to handle it for them.
I was okay with this and sent them my final invoice to clear all dues for the last month of my eBay work for them.
Apparently, they defaulted on the payment of my final invoice and when I inquired about it from the client he responded via email that read as follows:
Hi Sunil,
Sorry for the delay, with the month end and being the end of the year here we are really under the pump and running a long way behind. Please be patient and we will catch up in the next couple of week.
Sorry for the delay.
Thanks
Intrigued about the whole situation, I thought of writing them again inquiring them as to when they plan to take their newly built site online and the client responded as follows:
Hi Sunil,
This project has been put to one side as we have some issue that we are working through.
Thanks
After this client had ghosted completely and there was no further communication. I too stopped following up got busy with my own work. Then in the month of August, I got an email from PayPal which said that a “Significantly Not as Described Dispute” has been lodged against me and email read as follows:
Client in Question has opened a dispute for the payment made on 07-Mar-2016 indicating that the item they received did not match the original description.
Client in Question has requested a $4,041.30 AUD refund.
I was further informed by PayPal that my account shall remain frozen until this issue has not been resolved which meant that I would not be able to send and receive money via my PayPal account until there was a decision from PayPal on the above case.
I was also required to present my side of the story to the PayPal which would enable them to make a judgement about whether to decide the case in my favour or to decide the case in the complainant’s favour in which case I would have to refund the money they had asked for thereby losing both time and money I had invested in working on this project with this client.
I was required to submit documentary proofs which would help PayPal to understand if it was me or the client who was at fault.
By now I had understood what the whole situation was at the client’s end. They had for some reason decided to put a hold on this project and who knows they might have had a complete change of plan and might not be interested anymore to move ahead with their idea at all. So now all they were looking was to recover back the money they had invested in getting this site built and why not put a refund claim on the developer and hope to get at least 50% of their payment back.
For me losing this case would have meant that I had not only lost the money that I would have to repay them as a refund for their claim but I have also lost 4 months of my precious time which I could have utilized on some other better-paying project.
Fortunately, I had a record of all my email trails with the client wherein client had himself accepted that they have put a hold on this project as they were dealing with some issues internally in their organization when I had inquired as to when they would like me to transfer the site to them and make it live.
I collected screenshots of all the important email communication with the client that proved that his refund claims were not justified and that he was lying about the fact that I have given them something that was not as described or as required by the client.
I then sent the compiled copy of email screenshots to PayPal to make an informed judgement about the dispute. The matter was reviewed by the capable team at PayPal and within 4 days I received an email from PayPal which read as follows:
Dear Sunil Chauhan,
The following case was found in your favour. Any hold on this transaction has been removed.
misclassified_complaint
This essentially meant that I won the case and was no longer required to send any refund and my PayPal account was again back to normal after having been revoked/frozen owing to the dispute with the client.
By the way, if you are interested to learn more as to how PayPal handles Significantly Not As Described (SNAD) disputes you might want to check more about this at the following link:
Disputes, claims, chargebacks, and bank reversals
With all this false refund claim embargo there is an important lesson to learn for anyone who is new to the freelance world or anyone who is dealing with clients on their own.
There are all kind of people in this world and any person/business might pretend to be all good and nice to you initially but when it comes to money they are all brutal and can go to any lengths to make sure they get most out of you for what they paid and if possible also have the money they paid you to get refunded if situation allows this for them.
So it is very important to understand how to deal with such clients. My recommendation for anyone who is just starting out or who are not experienced with handling such a situation is as follows:
- Always be honest about your commitments with your clients. Make it your priority that what you promise is what you give to someone in business with you. Once you have this thing checked off your list, then you have only one another thing to take care which is discussed in next point.
- Have all your communication with clients specifically the important decisions regarding the project in written format preferably over email or some kind of contract.
This will save you from an impending panic if you are encountered with the situation like mine discussed in this post.
Hope this experience of mine helps someone somewhere going through a similar situation.
XOXO,
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