Refunding clients

Clients requesting refunds because they’re unhappy with the quality of work isn’t uncommon. We look at how to handle this situation and if your insurance can help.

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. He didn’t act on a lot of my advice 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 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.

After complaints about his site’s SEO performance, I sought advice from an experienced web developer who said that building the site in Muse 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 my client hired 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, says he isn’t happy and his communication is unhelpful. 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 a 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 free or discounted work to appease unhappy clients, which means they won’t respect your work relationship

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:

How to handle this situation

Speak to a legal expert for free

It’s a good idea to seek legal advice from the legal advice helpline that’s included with your legal expenses insurance.

The legal experts can give you pointers on dealing with client or contract disputes, late or non-payments and more. Make use of their expertise instead of navigating situations alone.

Even understanding what your rights are can equip you with the confidence to handle your client.

Don’t work for free to pacify your client

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. I can do some extra work for free?”). Please don’t do this.

Offering extra work for free implies that you feel you haven’t delivered the work that was originally agreed or to the standard the client expected. It’s okay to compromise with a client to meet their expectations and get the project tied up, but offering freebies is a slippery slope.

It can suggest you feel that you’ve fallen short. This can put you in a vulnerable position where clients try to capitalise on that and 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 foundation of what duties are to be expected of both parties. The job of your insurance policy is to step into action when those duties come into question.

A contract gives you an opportunity to 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 you’ll be retaining the money you’ve rightfully earned.

Contracts can give you protection in terms of the hours you spend on a project. For example, in your contract you can highlight that 3 rounds of revisions are 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 and manages your client’s expectations.

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 be invaluable in giving 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 legal and financial assistance, and support you through the negotiations with your client.

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 for yourself and have confrontations without worrying about suffering the financial consequences

We asked ourselves one important question…

What do we want out of an insurance provider?

With Jack is the answer