Ask HN: Anyone have experience with PayPal Claims for services?
I'm a web designer (new account but old member) and I've got a sticky situation relating to PayPal that I'd like to get other's feedback on.

THE SHORT VERSION

A client commissions services, paid 1/2 deposit through PayPal and within 6 days changed his mind and requested a refund on the basis that I wasn't responsive (untrue) and wasn't meeting my deadlines (again, untrue.) By the time they requested a refund, I had already done most of the work and had spent about 2/3 of the deposit on purchasing software needed for the project. The sticky part is that the project was so small I didn't create a contract. They filed a dispute, we went back and forth and eventually they escalated to a PayPal claim. In my response to the claim, I included a link to a PDF that contains all emails exchanged, that clearly shows that I'm not missing my deadlines and the longest gap between any email he sent and my response was about 20 hours. In addition, my last email to him contains a link to a working prototype of the website.

Anyone else have any experience with PayPal claims when they apply to services instead of shippable products?

THE LONG VERSION

I was commissioned by someone to build a website that was a membership-only job board that used WordPress and a few plugins to add the membership and job board functionality.

This happened on Day 1 (a sunday). On that day, the client paid a 1/2 deposit of $750 for the project using PayPal. After he paid, I sent him an email saying I'd have a prototype running by mid-end of the coming week.

I started creating a wireframe on Tuesday but soon realized that it would be better to setup a real site, add the plugins and go from there.

On Wednesday I bought the WordPress plugins (costing me $500) and started setting up the website. I got most of the functionality working but not all.

On Thursday I got an email from the client asking how the project was going. However, I had a lot going on that day so I wasn't able to respond on Thursday. I intended on emailing him but it just didn't happen so I figured I'd just email him on Friday to let him know that instead of a prototype, I'd have a working, functional version running by Monday.

On Friday around mid-day, I got an email from PayPal saying the client had filed a dispute. I emailed him immediately saying that I decided not to create screenshots but instead decided to create a working version immediately and that I'd have a real site by Monday. I figured it would put him at ease and calm things down.

Instead, he insisted on a refund claiming that I hadn't kept to my own deadline. This isn't true as I had clearly stated the project would take "3-4 weeks" (I put that in quotes as those were my exact words.) I replied back using the PayPal dispute system in a very courteous and professional manner, trying kindly to work out the situation as I've already done most of the work and want to get paid the 2nd half of the project.

After a number of messages going back and forth, mostly restating the same things, he escalated it to a claim. I was going to clean up the site tomorrow and send it to him but instead I sent him an email today with a link to it (in case his claim that I promised something this week holds any water.)

As my response to the claim, I included all my reasons for not offering the refund and created a PDF of all our email exchanges, uploaded it online and included the url as part of the response.

What it seems like to me is that they might have found someone cheaper to do the project (there are always bottom feeders) and they are looking for a way to get of the project while keeping their deposit. I would have refunded the project if he had simply said he had changed his mind and wanted to work out a way to get out of the project. Instead, he elected to make it look like I haven't served him well and his tone as well as approach just doesn't sit right with me. When combined with the fact that I've spent my money to make the project come together as well as my time, I've decided not to willingly refund the money.

What I'm wondering is what other's experience are with PayPal claims, ideally when relating to services. Shippable projects are so clear cut. It was either shipped or wasn't. This seems like there is a lot of gray area. I'm just trying to get my head around what to expect.