In episode 14 of Unsure? Insure! we share a story of an unhappy client asking for a refund. We’ll talk about how to handle this situation and if your insurance can help.
“I designed a website for a client. Despite my advice, he didn't pay extra for the SSL certificate and earned himself a red flag on Google. This, along with a lack of copy, meant he had trouble with his Google rankings.
I delivered the site without knowing much about these issues because they’re outside the scope of what I was hired to do. I charged him less than half of what he paid for his original site, and kept my rate low compared to the going rate around our area.
After complaints about his site's SEO performance, I sought advice from an experienced web developer. They said that building the site in Muse (which is software that enables you to design your website rather than develop it), meant it didn't co-operate well with search engines.
His suggestion was to rebuild the website from scratch, which I offered to do to make amends for any shortfall on my part, and I even covered the cost of the developer at no extra charge to the client.
It turns out this developer wasn't up to scratch, so in comes a new developer—a WordPress veteran. Within an hour they’d converted the Muse design into a functional website. However, my client now wanted more features. As a gesture of good will, I agreed to work on these new features for free.
The developer and I have now been working for this client for over a month on multiple revisions with no pay. He changes his mind often and says he isn't happy and his communication is unhelpful, passive aggressive or insulting. He now wants a full refund.
It feels like he's sabotaging every attempt at delivering a finished product. He's received far beyond what he paid for.
There is no contract because we’re a new business and we’re not sure what our legal position is. I'd appreciate any thoughts or suggestions.”
It feels like we're repeating a lot of themes on Unsure? Insure! and it's because many freelancers are falling into the same traps. These traps tend to be;
- Not having contract, which leaves the boundaries of the project wide open
- No solid project scope, which means the goalposts of what the finished project looks like keeps changing
- Offering to work for free or at a discounted rate to appease unhappy clients. Working for free is never a good idea
We won't talk about these issues in any detail because we have covered them in more depth in other posts, but all of these issues contribute to the downfall of the project. Here are some basic things you can do to protect yourself in the future:
- Always have a contract
- Always have a solid project scope in place with an understanding of how your budget and timescale will be revised if the scope changes
- Have the confidence to stand up for yourself and don't under value yourself
How to handle this situation
Firstly, it’s a good idea to seek legal advice from the experts provided to you via the legal advice helpline. This is included in the service you get with your legal expenses insurance.
The experts can give you pointers in dealing with client disputes, contract disputes, late or non-payments and more. Make use of their expertise instead of navigating situations alone.
Secondly, avoid the temptation to work for free or at a discount. It is tempting to throw in a 'freebie' if a client is asking for a refund to try to provide extra value ("I'm sorry you're not happy with the website. How about I build extra features for free?”), but please don't do this.
Offering extra work for free implies you feel you haven’t delivered the work that was originally agreed or to the standard the client expected. This suggests you feel that you’ve fallen short, which can put you in a vulnerable position where clients try to take advantage.
Offering to work for free gives your client ammunition to continue demanding further revisions until they’re happy. You could be locked into a never-ending cycle of doing extra work. That's how this freelancer felt when they were providing revision after revision and the client kept changing their mind.
Refer back to your contract and scope of work
Contracts are just as important as insurance. Their job is to lay the foundations of what duties are to be expected of both parties.
A good contract means you can prove you've satisfied all conditions. Your client isn’t due a refund because you can show you’ve completed the work to spec and within the agreed timeframe. You can show you've ticked all of the boxes and the client has no basis to request a refund.
Contracts can also give you protection in terms of revisions. For example, in your contract you might highlight you provide 3 revisions included within the budget and anything beyond that requires an additional fee. This helps to prevent you from getting stuck in an endless loop of revisions.
How can insurance help?
We’ve mentioned the legal expenses insurance helping in terms of the guidance you can receive via the legal advice helpline, but can professional indemnity insurance help?
Professional indemnity insurance doesn’t cover reimbursements. If your client is asking for a refund, your professional indemnity insurance wouldn’t be able to cover the cost of the refund. However, it can help in the sense that it gives you the confidence to stand up to clients.
What do I mean by this?
I know from having been a freelancer in these situations myself that insurance gives you the confidence to say to clients, “I’m sorry you're not happy, but I delivered the work that was agreed. I’ve delivered it to a good standard and within the agreed timescales. I’ve fulfilled my duty”.
If the client pursues further action—as in they make a legal threat or claim damages—your professional indemnity insurance would then be triggered. The insurer would step in to offer assistance.
It means you can have client confrontations without worrying about suffering the financial consequences. It means you can be a confident freelancer!
To recap, here's what to consider when a client requests a refund:
- Having a contract, solid project scope and not under valuing yourself are keys to good project management
- Seek advice on client disputes from the legal advice helpline included in your legal expenses insurance
- Avoid the temptation to work for free or throw in extras. This gives your client ammunition to continue demanding further revisions until they’re happy or generally just take advantage of you
- Refer back to your contract and project scope to highlight to your client you have delivered the work that was agreed and ticked all of the boxes
- Professional indemnity insurance doesn’t cover reimbursements, but it should give you the confidence to stand up to yourself and have confrontations without worrying about suffering the financial consequences