Is Freelancer.com a Scam?

Reviewing a website or service is mostly not the target of Llovizna. However, due to the increased population of Freelancer.com, I wanted to provide some feedback and cautions on using this site.

Freelancer.com, as its name suggests, a web site that lets the freelancers meet the employers, or task/job/project providers. It is based on Australia, and has grown to a very high level that no other freelance company or organization can even reach. The strength of such web sites is its users. Freelancer has plenty of it. You can compare this strength with that of Facebook to some extent. While everyone complains about the Facebook's policies, no one bothers to switch. Why? Other websites do not have the users! (I am not underestimating the user base of elance.com or Odesk. They have a huge user base. So unlike Facebook, freelancer.com has a huge competition).

If you search the Internet as a user who got annoyed by the scammers in Freelancer.com, you may find multiple complaints. I hope a few of the suggestions I give here will be useful to you.

1) Chances are high that you may just lose money, instead of earning

After a several bids, you are awarded a project from an employer. Now you gladly accept the project. Freelancer will charge 10%, 5%, or 3% of the full amount immediately, based on your subscription. Most of the beginners start with a free account, and hence are charged 10% of the full amount from Freelancer.com.

As a newbie, chances are high that the experienced employers will not hire you. That means, you are getting your project from a newbie employer. In other words, an employer without any reviews. He may be a fraud. He may just try to get the job done, and leave without paying a cent. Freelancer suggest requesting a mile stone payment model for this, where you request at least 20% (suggested is 50%) of the complete amount. You start work only after getting the mile stone created. Once the mile stone created, the money will transfer from the employer's account to the Freelancer.com's bank account. So the chance of the employer cheating will be minimal. Once you have completed the job, the employer will inform Freelancer.com that the project is completed and hence the payment can be released.

However, say, the employer decides to stop communicating with you, as soon as you accept the project. As Freelancer.com suggests, you will not start working till he creates the milestone. You may avoid working without getting paid, in this manner. However, even if you decide to abort the project, Freelancer will not refund its charges, in ANY case. This is clearly mentioned in its FAQ. That means, if you accept a project worth 500 USD, your credit card will be immediately charged 50 USD. Whether the employer is genuine or not is not the question.

2 Possibilities:

Worst Case: You will not be completely paid the 500 USD, as you are new, and hence met with an evil employer. You will end up with a loss of 50 USD, and with an incomplete project which will ruin your freelancer.com profile for eternity.

Best Case: You got an awesome project and an awesome employer, who promptly pays 500 USD. Note that your card was charged 50 USD in day-0, and say you complete the task in day-2. You will have to wait for a month or even two, to get the first payment from Freelancer.com. Check the next point (Point-2) given below to see why!

2) Getting your first payment out of Freelancer is a nightmare.

Let's say, you have successfully completed your first project and want to get paid. Now comes the troubles. For some unknown security reasons, they have included a 3 week period of verification, before the first payment. That means, employer pays the complete amount, fully satisfied with your job. This broker (i.e. Freelancer.com), decides to keep your amount in 3 weeks, in their bank accounts.

Let's think of a few cases.

Case 1:

You get paid for a project - 200 USD. You request withdrawal via paypal for 200 USD. Reducing 1 USD, they schedule 199 USD, to pay in 3 weeks. Now, within that three weeks period, you are awarded another project worth 100 USD, from the same or another employer. As you accept the project, Freelancer will immediately charge you 10 USD (or according to your subscription). Where will they charge from? Not from your credit card this time. They will charge from your Freelacer.com balance instead. Now the balance will be 200 USD - 10 USD = 190 USD in your account, where your previous request for the transaction was 200 USD. With the below message, Freelancer.com will cancel your payment request! "Not enough funds to complete your withdrawal request!"

You may request for 190 USD again now. They will schedule your payment now. But it will be scheduled again for a day after 3 weeks, again! Wait for 3 more weeks!

Case 2:

You have a basic subscription. You, as in case 1, have asked a transfer. Since you know that accepting a project at this moment will cancel your payment request, now you are cautious. You will try not to withdraw the complete amount. Say, you request just 100 USD, to avoid facing the above mentioned issue repeatedly, or you decide not to work with Freelancer.com till you receive your first 200 USD withdrawal request. Now, assuming that you have a subscription with a monthly fees (not a free account). Within 3 weeks, the next month will come and Freelancer.com will charge the monthly fees from your balance, and cancel the transaction request as in Case-1. Freelancer.com will give an evil smile to you, as a big troll!

How to avoid these?

1) Once you have received your first payment from Freelancer.com, the consequent payments are done twice a week, and hence will not take much time. Just be cautious, if you are a new user. Once you received the payment for the first job, do not try to withdraw the entire amount. Chances are pretty high that the balance will go negative, and your payment request will be cancelled, as we saw in previous cases. Request withdrawal for just a part of it. Say, 150 USD (75%), instead of the entire 200 USD. Avoid accepting any big scale project, till you receive your first payment. Once you have received your first payment, you will become a master, and will not require to read this blog post at all.

2) Avoid having multiple currencies in your account, and try to keep USD as your default. Say you keep Euro as your primary currency. When you are awarded 200 USD, you decide to change half of it (100 USD) to Euro. You will have to face additional hurdles by this.

* Freelancer.com money conversion facility is not free. It will charge you.

* Say you have 100 USD and 60 Euro in your Freelancer.com, as you have transferred a 100 USD to Euro, as above. Now you have requested the withdrawal of 60 USD, and your primary currency is Euro. At this moment, if a project is awarded, or if Freelancer.com decides to charge you the monthly subscription fee, they will surely charge from the 70 Euro, as it is your primary currency, and they will not touch the 100 USD. That means, though you felt that you have balance in your account, so that your transaction is safe, it is not safe, in real. Freelancer.com will get an additional chance to delay your payment by further 3 weeks. It is better to keep the balance in a single currency, which is also your primary currency, to avoid this. In other words, better to stick to USD.

3) Avoid accepting suspicious projects.

A few cheats open jobs with very high amounts, targeting the newbies to cheat. In these cases, the employers themselves too will be new, or at least will have negative ratings. It is always better to avoid the first project with a higher value to reduce the risk of immediate money loss to Freelancer.com in the name of bidding charges. Within a few days of testing, I just lost 50 USD to Freelance.com, just because I accepted a project from a suspicious employer, who didn't bother to respond further, after I accepted the project. Probably, he must have thought that I am clueless, and would work without getting the milestone payment requests accepted (without getting paid).

An update made on the 6th of August 2013: Always Google for the project title and the description.  Some of the employers themselves are freelancers in freelancer.com or similar sites. I was contacted by an 'employer' in Freelancer.com to complete a task for 80 USD. He was sending me the information over personal email instead of using Freelancer.com, against the Freelancer policies. I asked him to create a project in Freelancer.com with milestone, and also let him know that my budget is 200 Euro. He rejected the offer, as it is beyond his budget. A quick Google revealed me that, he was hired by another employer to do the project for 200 USD, and now he is trying to subcontract me for 80 USD! Obviously 200 Euro is greater than 200 USD. So he didn't hire me.

In this case, the original genuine employer has offered him a reasonable amount to do the task. Now this freelancer himself has become an 'employer', and is trying to get an innocent freelancer to do the same task for peanuts! Now he will be able to finish the task and earn 120 USD without any effort, while securing good reviews on Freelancer.com for the quality job. Seems many of these 100 - 150 Words for 1 USD article deals are made this way. Some experienced freelancers prey on the novice/new freelancers, who are otherwise talented. It is a shortcoming of the freelancing sites that they focus only on the reputation on the site, and not the experience and qualification of the freelancer, outside the website or network.

By being extra careful, you will be able to receive your first payment within a month, escaping the dirty tricks of the scam users of freelancer.com, and once you have received your first payment, you will be fine with the game! Hope this long blog post was useful for you. Wish you all the best, and hope to see you soon with the critical analysis of yet another service.

You may read the sequel of this post titled, "Freelancer.com exams and reviews - why you should not trust them.." for a more recent analysis and review.

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