The dangers of Elance, oDesk and other freelance marketplaces

Posted on Jul 15th, 2014 | Running a business

Having been involved in an identity theft scam on Elance, I’ve since learnt a few things about the risks of using these freelance marketplaces. Are the risks avoidable? That’s for you to decide.

I’m going to be rather critical of these websites, but I must stress that plenty of people love them. Anyway, here are the risks that I’m aware of.

Tricksters and conmen

Freelance marketplaces are theoretically brilliant, because they can bring you work from the four corners of the Earth. But the global, anonymous nature of the network also has downsides. Namely, it’s incredibly easy to create a fake profile, engage a gaggle of freelancers and then disappear with a clutch of free work.

Elance does offer protection for freelancers – but only if you work on a fixed price basis. If you agree a flat fee with your client then Elance can hold the project funds in an Escrow account. But if you take on projects that are priced on an hourly basis then you have less protection.

Now, the trouble for you, the freelancer, is that the client is likely to dictate whether a project is calculated on a fixed price or an hourly rate. You may not have a choice.

How can you spot a fraudster on Elance?

In my limited experience I suggest the following should ring alarm bells:

  • Gmail or Hotmail email address – yet claims to be a professional. Okay, so if a business is contacting you, why aren’t they emailing you from their own domain? Look out for other signs that a so-called professional isn’t behaving in a professional manner.
  • Wants to conduct conversations away from Elance – or deviate from Elance’s recommended processes. This may suggest they’re trying to fly under the radar of the marketplace. Elance and their ilk have systems designed to protect both the freelancer and the client, but you can render them useless by contravening their terms. Whenever possible, work within the rules of your chosen marketplace – it’s for your own good!

Low pay

Elance jobs might be abundant, but in my limited experience they’re also terribly paid. The global nature of freelance marketplaces is wonderful in many ways, and it works brilliantly for many freelancers and clients, but the system generally favours people who have a lower cost of living.

Am I wrong? Do freelance marketplaces offer good work for solid pay?

Low standards

From what I’ve seen, the majority of jobs posted on freelance marketplaces are low-value and low-prestige. These jobs might be great fodder for the newbie, but they suck for anyone wanting to build a profile or challenge themselves.

What kind of client uses oDesk, Elance, Guru and Typical clients using these services are:

  • Small businesses with limited funds
  • Startups with small budgets
  • Scammers with no intention of paying
  • SEO practitioners who need “stuff” to fill their “websites”

So while you might find a very rewarding job with a genuine family-run business, you’re going to have to dodge a lot of bullets first.

Your future is in their hands

Freelance marketplaces reward your devotion. You do a few projects, get some badges to add to your profile, receive some nice feedback and you feel like you’re succeeding. You now find it easier to win the low-value, low-prestige jobs, and can spend less time writing proposals and more time earning $12 an hour.

But, if you build your reputation on Elance, oDesk or Guru, your reputation is confined to that service. The credentials you amass on someone else’s network are very hard to transfer. Sure, you can add those projects to your portfolio, and copy and paste the feedback, but ultimately your eggs are all in someone else’s basket.

If you build your reputation in the real world, it will grow legs and carry you far. If you do great work for a local business, other people will hear about it. And instead of getting referrals from some other SEO / spammer / conman, you’ll be getting calls from reputable businesses that are keen to pay you a fair price for valued work.

Or why not invest time in creating your own web presence? If you can create an Elance profile, you can definitely create a website. Make your own online marketing funnel and free yourself from the grubby mitts of the freelance marketplaces.

You could create your own website in minutes using:

  • Yola

What if your freelance marketplace goes bust? Or starts charging you fees? Or bans you for life? These are more good reasons for ensuring your profile is not confined to one marketplace.

What have I missed? Are there any other risks of using freelance marketplaces? Or have I got it all wrong? Are these marketplaces actually brilliant places to find rewarding work?

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Written by Lief Kendall

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