How to Avoid Getting Scammed When Building a Digital Product
In this article, I will show you how to choose the best agency or freelancer to build your digital product without dealing with the fear of losing your money.
We recently started working with a client from the US on his new e-commerce website. During our first meetings, a challenge that we didn’t encounter in some time popped up when discussing an estimation.
“Since you guys are based in Europe, and I’m in the US – how can I make sure everything goes smoothly, meaning I don’t lose my money?”
It struck me that many more potential clients and partners must be settling for local development teams that they don’t have great chemistry or relationship with instead of searching for the best possible partner worldwide because of the fear of getting scammed.
Since COVID-19 showed us that companies could adapt and people can easily be productive while working from home, there is no longer an excuse to settle for local and possibly average results instead of the best possible tech partner.
Yes, the EU legislation has your back
You can rely on the fact that we are a European country under the CEE legislation. If you are from outside of the EU, some of the laws applicable in your jurisdiction don’t apply in the EU. Otherwise, you will find this is quite predictable and open for business jurisdiction. Europe loves to work with the broad global market. Yes, we play nice with other countries. If you are in the EU, you might want to know that we basically copy-pasted legislation from each other, so there is zero friction.
- Consumer and work legal framework is broadly the same throughout the EU.
- Two directives will interest you: EU Directive 2019/2161 Of The European Parliament And Of The Council and Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts.
- Some of the legislation in your country might not apply in the EU. In particular, I found copyright laws, privacy laws (including GDPR), and competition laws are different than other jurisdictions. You might want to read the contract with a lawyer if you have special considerations.
- If you encounter any issue, the fast track to solving it is to contact the local Consumer Protection Office.
This being said, good prevention gives you less of a headache.
Vet your company
There are steps to vet your company of choice and to make sure your contract is appropriately cheat-proofed:
- Check their website. They should have an address and a VAT registration number. There is no reason why they wouldn’t offer that information to you.
- Ask for references whenever you can. It takes less than 3 minutes to write a short email to three or four connections and less than 24 hours to get at least one answer.
“I am planning to work with Neo Vision to develop a digital product and wondered whether they are reliable. I know you previously worked with them, and I’m interested to know how they performed. Brgds.”
You would most likely answer an email like this, wouldn’t you? Feel free to send this to any of our partners in our portfolio.
- Do not work without a contract. No matter how urgent your project may be, your devs can take two minutes to send you their standard contract. Even if the CEO is on vacation or their lawyer has the sniffles, there is no excuse to avoid proper paperwork.
- You have control over what goes in the contract and what doesn’t. A reliable company will accommodate your requests as much as legally possible. Whether you want more privacy guarantees, reassurance, or explicit statements on procedures, your partners will put those in your contract.
- Even with a signed contract, you are protected from abusive claims. For example, your developers cannot deny your restitution rights or claim zero penalties for delays. The EU legislation on abusive claims is quite comprehensive and does precisely that: it protects you from abusive claims that you might have missed.
Make sure they are the right one
You might have your product management and project management teams. If you don’t, your tech partner should understand how their product grows your business.
Ideally, they invest their time into one or two discovery meetings with you to build an appropriate brief. I know the focus in the development landscape is to bill from the start and to bill everything. I still feel like giving some value before asking for money in return is the way to go. It allows the client to have a trial of what it would be like working with you. It helps them structure their project and understand the work style of their agency beforehand.
Our clients need to compare more than one offer. How do they know what they’re comparing if they didn’t get samples? How many unsuccessful meetings can the founder of a business afford before they set their sight on one development agency? Paying for that first session before you even decide on an agency is a bit like being asked to pay a fee every time you want to try a pair of jeans. Discussing your project with more than one supplier is common sense before making a decision.
Choose your perfect payment plan
Before discussing payments and installments, make sure you sign an agreement that binds you and your tech partner to your agreed plan. The contract should include the project’s brief, timeline, billed hours, the transfer of intellectual property, and other remedies if any of the parties don’t fulfill their end of the agreement.
Most IT companies will charge upfront payments. By this time, if everything is looking good and you have signed the agreement, you should be safe. An escrow account should do the trick if you want another line of defense. If you’re going to take that route, you should choose the escrow account suppliers and pay for the extra commissions.
You can also pay as you go, meaning weekly invoices with short payment deadlines. In this case, you pay weekly in advance, minimizing possible losses. If you go this route, it’s essential to stay on top of the payment plan and not cause delays since you don’t want your partners to think you are the one scamming them.
This requires a perfect tango of two variables. At the end of each week, the tech partner should provide you with proof of work in the form of an hourly work report, a new deployment on the staging server, a new document, or whatever, and you must be ready to pay for the next week after their proof of work.
I encourage you to search for your perfect tech partner, give your trust in exchange for their trust, ask as many questions until you feel comfortable, and then go on and build some awesome digital products.
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