vBEscrow Service?

[yinyang]

i was curious to know everyone's input on a service for vbulletin. this idea, which is not new, would help alleviate some of the problems coders have with clients not paying and for clients who pay and have the coders disappear.

the service itself, tentatively called "fifty50" would be set up as a bonafide 501(c)(3) tax-exempt corporation. The corporation would serve as an escrow company for coders and clients.

fifty50 should solve the problem of this "chicken and the egg" dilemma in client/coding services.

a) when a Client (someone who needs coding) and Coder agree on terms, they sign a contract and agreement.
b) the sum of money then gets deposited into a client account designated by "fifty50.net".
c) When the funds are received, fifty50 contacts the coder and coder begins his work.
d) when coder finishes his job, he delivers his project and upon satisfactory receipt ("as outlined and defined in their agreement") of the coding project by the Client, fifty50 releases the funds to the Coder.

now there are obviously some bugs and kinks to work out. the fee for this would be 1% of the contracted amount (maybe with a floor and ceiling) and will come out of the escrow account and the balance will be transferred to the Coder.

since fifty50.net would be a non-profit, the Coder can apply the 1% fee they paid as a legitimate charitable tax-deduction.

under this model, this would be a Coder driven business, i.e., the Coders pay for it. However, it could easily be reworked where the Clients may also have to pay some additional fees as well... but again, these fees are to a 501(c)(3) non-profit and thus the Client can claim those fees as a charitable tax-deduction.

well, i'm curious to know your thoughts on something like this.

[filburt1]

I would not use it because it is not offered by a very major service such as PayPal or my bank.

[yinyang]

Originally Posted by filburt1

I would not use it because it is not offered by a very major service such as PayPal or my bank.

do you know if your bank or paypal offers this service? i know there's something like this for ebay, but i haven't found any other service out there. my banks won't do it.

[filburt1]

No, PayPal doesn't and I don't think my bank does. However, those are the only two entities whom I trust with my money.

edit: note I'm not saying your idea is bad, I just wouldn't use it because I do not trust the source (nothing personal, of course)

[Dean C]

Unless you were backed financially by a major corporation and the system was implemented and maintained by experts in network security and the programming language the system was developed in, then I wouldn't even trust $5 in your hands

As filburt said, it's not personal, but I'd have to say anybody would be crazy to use a gateway as this.

[yinyang]

Originally Posted by Dean C

Unless you were backed financially by a major corporation and the system was implemented and maintained by experts in network security and the programming language the system was developed in, then I wouldn't even trust $5 in your hands

As filburt said, it's not personal, but I'd have to say anybody would be crazy to use a gateway as this.

definitely no offense taken! i was just thinking of a solution for a common problem. i've set up many of these type of accounts for film financing, which is the industry i've been in for 12 years. i've moved millions in and out of escrow throughout the years for numerous film projects, but am able to do so because of our insurance bonds.

however, these AAA firms won't touch something as measley as vbulletin or other software hacking projects. that's why i indicated setting it up as a non-profit.

but, for the sake of knowledge, i can understand why you would want the corporation backed by a large corporation, but can you elaborate on how a "system that was implemented and maintained by experts in network security and the programming language the system was developed in" would give you more ease of mind?

after all this is an escrow account. when we added a pool/guest house to my main house last year and the contractor wanted his usual payment schedule, i instead used a construction escrow account. now, this was backed by a bank but a bank will do this for construction since the escrowed amount was well over $250K.

what it sounds like is that taking a chance on a client not paying a coder or a coder not completing a project is just all part of the biz. it's just that the size of the fee for these coding services are two to three zeros shy of anyone like a bank or insurance company to bother with. but to someone who's left with either money out of pocket and no result or someone who's created something that won't ever be paid for, these few hundred dollars do mean a lot.

i just wish there could be a better way!

[Moncal]

Why would it have to be a new escrow service? Why couldn't concerned clients and coders just use an established escrow service such as escrow.com?

[Dean C]

Another issue you'd have is disputes. Would you want to interfere and investigate entirely the situation before you decide which way the funds go? A contract doesn't always protect everyones behinds unfortunately And if the client/coder wishes to take further action you could get in the firing line too

[yinyang]

Originally Posted by Moncal

Why would it have to be a new escrow service? Why couldn't concerned clients and coders just use an established escrow service such as escrow.com?

escrow.com as well as most, if not all companies like it out there only deal in hard goods. not services. they'll provide escrow services if a buyer is purchasing a product, but not if they're purchasing somethine like web design services, etc.

Originally Posted by Dean C

Another issue you'd have is disputes. Would you want to interfere and investigate entirely the situation before you decide which way the funds go? A contract doesn't always protect everyones behinds unfortunately And if the client/coder wishes to take further action you could get in the firing line too

i think if a coder and client were to have disputes, then they would actually benefit by having the funds escrowed. they would have more incentive to work things out. the escrow company will not release funds unless they either 1) get a mutually signed 'completion of services agreement' or 2) if they get a court order.

by having the funds escrowed, neither party has the money. the client has already paid the money and therefore they don't have the money to withhold from the coder, and the coder doesn't have the funds to runaway with. they would have to work things out.

alternatively, without this service, and assuming there is a dispute, then i can see the following scenarios:
1. client pays full amount for job and receives work product and claims it is unsatisfactory.
2. client pays some amount for job and receives work product and claims it is unsatisfactory.
3. client pays zero dollars and receives work product and claims it is unsatisfactory.

in any case, let's say the above parties are unwilling to work out their dispute, then:
a. in scenario one, the coder already has his full fee, what's his incentive to prove his work is not unsatisfactory.
b. in scenario two, the coder already has half his fee and maybe he did do a quick job, but he's got paid half so he may be okay with not finishing the work (particularly if client relations turn bad)
c. in scenario three, the coder has done all the work and turned it in, and the client claims it is unsatisfactory, (when let's say it really isn't), and then refuses to pay.

the only resolution for a, b and c is legal means. now if the job is worth $300, then the time and money it takes to file a lawsuit is unrealistic, especially if you're dealing with client and coder who do not live in the same area, state, country, etc. if they lived in the same city, then small claims court would be the answer, but i am sure that 99.99% of all such client-coder relationships take place with parties that do not reside near each other.

however, if there was an escrow service, and scenarios 1, 2 and 3 were to take place, then a, b and c do not apply. neither coder nor client has the funds so no one can realistically take advantage of another person.

what the escrow company does is to prevent malicious practices or clients/coders with mal intent. if a client and coder are serious about doing business, then obviously an escrow company would not be needed as they should be able to work things out.

however, if a client or coder unwillingly meets a "crook", then an escrow service, i think, would definitely help be a deterrent.

in fact, having a client or coder even request such a service may help weed out would be "crooks" or those who are trying to take advantage of others. i mean, we're talking 1% of the entire fee that is also tax-deductive since the service would be operated as a 501(c)(3) tax exempt non-profit.

if i were a client or coder and requested that payment be made into an escrow account and the other party refuses, that would, at the very least, raise a red flag in my mind.

[BusinessCoach]

501 c 3 is not the way, and of course a LOT has changed now that its 2009...the problem has gotten WORSE for both coders and buyer, and not just here, and there still is no solution

are you still interested in doing this???