How to protect yourself from clients who are scammers or involved in illegal activity?

Question

As I start looking into the possibility of freelancing more and more, I've run into a problem (as someone had warned me before on here). I am afraid of dealing with scammers online (or even offline). I am generally computer-savvy enough to spot these kind of things usually, but recently I almost fell for a scam online.

I am usually cautious, but wasn't as cautious for this one instance. Going through the experience discouraged me from exploring the freelancing route more. I am afraid of the possibility of getting involved with a client who is doing illegal stuff or trying to scam me in some way. I've read a lot of posts on oDesk (now called UpWork) where people get scammed by clients online or find out later on that whatever work they are doing for the client is illegal.

What do you do as a freelancer to protect yourself from these kinds of situations but at the same time still find new clients to work with?

Answer 1

• Use common sense
• Use escrow
• Go with your gut feeling (if you have good intuition)

Assuming you are looking at contracts on oDesk/Elance, etc:

• Start by looking at the way the job posting is written. Does the client use proper English, or do they rite in txt msg spk or have a poor grasp of the English language? I will usually only consider clients who have well-written job postings; in my experience those who write sloppy job postings are usually being shady, while working with someone with a language barrier is rarely worth the hassle even if they aren't trying to scam you.
• Evaluate the project goals. Are they asking for someone to copy or reverse engineer someone else's software? That's already getting into a legal grey area. If it sounds like they want you to steal someone else's work, or edit something they stole, just keep walking
• Carefully study the payment terms. If they are only willing to do a single payment after the entire project is completed, you are at a much higher risk of being scammed. Never take jobs where the client says payment depends on quality of the final deliverables, because that leaves them too much room to say they aren't satisfied with your work, pay you nothing, and then use your work anyway. Only take fixed-price jobs that have escrow; oDesk doesn't have escrow right now, so if you prefer fixed price, you should be looking on Elance or elsewhere
• Make sure deliverables are explicitly specified in the contract terms. Don't leave any room for "When I said A, I meant A, B, C, D, and E"
• Only use written forms of communication that you can use as evidence if the client tries to cheat or extort you.
• Consider only taking clients with extensive payment history - this can close a lot of doors for you, but if they have completed and paid 20 projects with good responses from the freelancers, you can feel fairly confident they aren't in it to scam you. That said, I have had good success with many first-time clients as well
• Know the rules of your service - carefully review all of the terms of service for the freelancing service you are finding work through.

If you are talking with a client, and their general attitude seems at all shady or makes you feel uncomfortable, just walk away. It's not worth the risk and hassle.

One other tip - be very weary of jobs where the posting is in excellent English but the client seems to have a very poor grasp of the language. They probably got hired for a job they aren't qualified for and are trying to farm out the work.

Answer 2

What do you consider illegal? I mean what is your area of expertise? Looks like a PA, right?

I have been a developer myself and I have never been involved in anything illegal. I think a few times client told me if I am ready to do coding of the porn content. But as you can see, they asked me in advance.

The "scam" that odesk-ers face come from doing work and either not being paid or asked to work extra tasks without change in price. All scams I saw were those. But with a common sense and not accepting any client, you can pretty much guess if some client is a good or a bad guy.

Is he telling you details about work? Is he listening what you have to say? Is he rushing you accept the job? Is he telling you to accept the job and all of that will be discussed later? Doesn't this sound odd or warning to you?!

Even being hungry for a month (have not been so far), I would not accept a job which I am not confident I can do, a job which specifics are unknown to me or a client who is not aware of the budget.

Let me know if I missed my point so maybe I can add more to this.

Answer 3

This question might belong under law or insurance.

If you knowingly commit a crime, you have no recourse, you are guilty. However, if you were unwittingly hired to produce a solution resulting in criminal charges being filed, you would be in a bit of hot water for sure.

The ways to protect yourself are many, and consulting with a good lawyer to draw up a contract might not be a bad idea. You want your software contract to include a liability and indemnity clause. This will partially protect you. Also, disclaimer, waiver, whatever elses your lawyer tells you to do. Here is a partial example...

Indemnity

• As a result of the client’s instructions, the developer led unwittingly to infringe the intellectual property rights of a third party.
• The developer provides a system which infringes such rights through carelessness or dishonesty, e.g. using proprietary software as a component of the system delivered.

For this reason, it is advisable to include a clause under which each party indemnifies the other for liability arising from its own faults in this respect.

You might also want to talk to an insurance agent or financial adviser about a liability or umbrella policy for additional coverage. Trust me, having funds available for legal services when you need them is extremely important in the outcome of your case if you are charged.

I'm pretty sure you can create/view/print one business contract here for free, I would say just to get an example of a good contract and maybe play around with it a bit.

Contract Link

Hope this helps a little bit, and good luck.