Vol. 3 No. 2

February 2011

Handling Deadbeat Clients

I normally enjoy writing newsletters. However, this one is not as much fun because I am writing about being scammed.

How it Begins
The Deadbeat Client is confirmed after the invoice is sent. A once-communicative client goes silent and stops answering emails. Although he is happy to use your work, the money owed is never sent.

Once the deadline has passed and it's clear that the client has no intention of paying, it's time to kick things into action. Although not every client is worth the full response (if you're owed a small amount it may be wise to just ignore it), here are some steps you can take to get what is owed or at least reclaim your work.

What to Do When a Client Fails to Pay You

1. Be Persistent

Don't stop sending the invoices. Keep sending them and using every available means, email, fax, and postal mail (using certified mail if at all possible). Sometimes a Deadbeat client is just one who has had a temporary lapse and, by staying on the ball, you can be first in line for when they return to normal.

More importantly, it establishes a chain that shows you made a reasonable effort to notify your client of what was owed and collect those funds. The better the chain, the stronger case you have if you go to court.

2. Escalate, Carefully

When invoices stop working and the past due stamps aren't getting the job done, it's time to escalate. How long you wait will depend on your contract and the terms set under it, but generally there comes a time to stop sending invoices and start sending Cease and Desist letters.

Once again, send them by any means available with a heavy emphasis on certified mail. If you can show that you are serious with these letters, you'll have a better chance of success. At this point, it's time to stop treating it as a client issue and start looking at it as a copyright issue.

3. File a Takedown Notice

As mentioned above, at this point the matter is not so much a client/freelancer matter as a regular copyright one. Whether you have a contract or not and regardless of the rights or license you aimed to give them in the work, the contract does not execute until you receive payment. Therefore, they have no right to use the work in marketing collateral without paying and you still have copyright in it.

4. Consider a Lawsuit

If the Takedown Notice isn't working or they simply keep using your artwork, you may need to look at filing a lawsuit. You can sue for the greater of what you lost or they gained by fraudulently using your work (better known as actual damages).

5. Tell Others

Although I hate to recommend mob justice, this is a rare exception to the rule. Telling other freelancer that a client doesn't pay will help protect them should they get offers from the client and will help reduce the pool of victims for the Deadbeat should he continue to try to scam others. Also tell the Deadbeat's customers, retailers, and distributors because they are likely to want to buy from an honest businessman for fear the Deadbeat may try to scam them, too. Often, Deadbeat Clients only pay up when they feel the heat from a public disclosure, but be careful not to let the mob get out of hand.

Bottom Line

It's important to remember that, whether you have a written contract or not, the terms of the license don't take effect until payment is made and a release is signed. You have ownership of your work and the right to block any use of it until they complete their half of the bargain.

Although you shouldn't treat a client like a regular plagiarist, realizing that you have the copyright in your work and they don't have a license to use it gives you leverage. However, you can avoid the situation by requiring payment before releasing your work. Don't put mistaken trust in a Deadbeat Client.

Click the Silent Thief on the right to read blog and leave comments.
Which step would you take?

Ande