VIC Legal requirements regarding Australian Financial Services license

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beecee

Member
26 July 2017
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I am looking for advice surrounding a website that I have built and am about to launch.

The website is very similar to Upwork.com but it is based in Australia and is for Australian freelancers only.
My main concern is whether or not I will need a Financial Services License to hold money in an escrow account (which is actually being held by PayPal).

This is how things work to a freelancer or an employer:

- When a project is awarded to a freelancer, the employer pays the full project cost
- The money is held by the website until the project is completed successfully
- When the employer gives the go ahead, the funds are released to the freelancer
- The website takes 6% of the project cost

This is how it actually works in the backend of the site:

- The employer pays the project costs, which go directly into the website's PayPal account
- When the project is completed successfully, money is then transferred out of the PayPal account and into the freelancers PayPal account

So it appears as though the website is holding the funds, but in fact it is PayPal. The website is basically the middleman and the provider of the service.

So would I need a license for this?
 

Rob Legat - SBPL

Lawyer
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16 February 2017
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On the face of it, I doubt you would need an AFSL as it doesn't appear you're giving financial advice or dealing in a financial product. You might want to get some advice about the best contract structure and disclosure regarding the retention of funds, how they will be disbursed, and what happens in the case of dispute. You should also determine whether you need an actual trust account, and whether PayPal's facility satisfies your legal requirements.
 

beecee

Member
26 July 2017
3
0
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Thanks for the reply Rob.

You should also determine whether you need an actual trust account, and whether PayPal's facility satisfies your legal requirements.
How can I determine this? I haven't the faintest idea where to actually start.
I am trying to avoid setting up any type of account of my own - using PayPal in this way is my ideal scenario (provided that I can do this).
 

Rob Legat - SBPL

Lawyer
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How can I determine this? I haven't the faintest idea where to actually start.

It's trite to say it, but that's why there are people like lawyers to assist. What you're asking is getting into quite specific territory. If you are unable to determine it for yourself, you should look to engaging a Victorian lawyer to provide you with some advice.