Donefy Payment Protection Terms

Effective date: [date] · Version: payment-protection-2026-10-draft

"Donefy Payment Protection" describes how [Donefy legal entity name] ("Donefy") collects a client's payment for a project, holds it while the work is done, and releases it to the provider milestone by milestone. These terms are part of the Client Terms of Service and the Provider Agreement and apply to every project paid through the Donefy Services platform (the "Platform").

1. Plain-English summary

• The client pays the project price plus a 5% client service fee after both sides sign the Project Agreement.
• Donefy collects that payment on behalf of the provider, as the provider's limited payment collection agent. Once the client pays Donefy, the client has paid the provider.
• Donefy releases the money to the provider one milestone at a time, after the client accepts the milestone or after 5 days with no response.
• If something goes wrong, the client can request changes or open a dispute, and Donefy decides how the paused milestone money is released, refunded or split.
• Donefy keeps a 10% provider fee from each released milestone.
• Donefy Payment Protection is not escrow, insurance, a bank account, a guarantee of the work, or a deposit account.

2. Donefy's role: limited payment collection agent of the provider

2.1 Appointment. Under the Provider Agreement, each provider appoints Donefy as its limited agent for the sole purpose of (a) accepting payments from clients for the provider's projects, (b) holding those funds, through our payment processor, until they are released under these terms, and (c) releasing them to the provider, or refunding them to the client, as these terms provide.

2.2 Payment to Donefy is payment to the provider. When a client's payment to Donefy succeeds, the client's obligation to pay the provider is satisfied to the extent of that payment, even if Donefy has not yet released the funds to the provider, and even if Donefy fails to release them. The provider agrees to look only to Donefy, not to the client, for funds the client has paid through the Platform. This protects clients: once you have paid through Donefy, a provider may not demand that amount from you again.

2.3 Why this model. Businesses that receive and pass on money for others may need a money transmitter license in many states. Most states recognize an exception, by statute, regulation or regulator interpretation, for a person that receives payment as the agent of the payee (the person being paid), under a written agreement, where the payer's obligation is discharged on payment to the agent. Marketplaces that collect for their sellers commonly rely on it. Donefy is structured to fit that exception: the provider (payee) appoints Donefy in writing (2.1), and the client's payment to Donefy discharges the client (2.2). In addition, funds are processed and held by our payment processor, Stripe, and its partner banks, which are licensed or exempt for this purpose; Donefy does not hold client funds in its own bank accounts.

2.4 Not escrow. Donefy is not an escrow agent or escrow company and does not hold funds as a neutral third party for both sides. Donefy acts for the provider in collecting payment, while agreeing with both parties to the release, refund and dispute rules below. Donefy does not provide escrow services as defined by any state law (for example, the California Escrow Law).

2.5 Not a bank or insurer. Funds held for a project are not deposits, do not earn interest for the client or the provider, and are not insured by the FDIC through Donefy. Donefy Payment Protection is not insurance and does not cover property damage, injury, or the cost of completing or redoing the work beyond the funds held for the project.

3. Payment processing

3.1 Processor. Payments are processed by our payment processor, Stripe, Inc. Clients enter card or bank details directly with Stripe. Providers receive payouts through a connected account with Stripe and must accept Stripe's Connected Account Agreement, which includes the Stripe Services Agreement. Donefy does not store full card or bank account numbers.

3.2 Payment methods. Card and US bank account (ACH) are accepted. ACH payments may take several business days to settle; work should not start until the Platform shows the project as paid.

3.3 Platform charges. Payments are charged by Donefy's platform account and transferred to the provider's connected account when released. Each released amount, the provider fee and any refunds are shown in each party's payment history.

4. Paying for a project

4.1 When. After both parties sign the Project Agreement, the client pays the Total (project price plus the 5% client service fee) through the Platform. The provider must have completed payout onboarding first.

4.2 Confirmation. A payment counts as made only when Donefy receives confirmation from the processor (not when the client submits the form). The project then becomes active and the milestones are created.

4.3 Failed payment. If payment fails, the project stays awarded and the client may try again. If payment is not made within [7] days, either party may cancel the award without charge.

4.4 Price changes. Additional amounts agreed in a written change order are paid through the Platform the same way and added to the relevant milestone or a new milestone.

4.5 Fees. The client service fee (5% of the price) is earned by Donefy when the payment is made and is non-refundable except as stated in Section 7. The provider fee (10% of each released milestone) is earned when the milestone is released.

4.6 State limits on advance payments. California (Business and Professions Code 7159.5) generally limits a home improvement contractor's down payment to the lesser of $1,000 or 10% of the contract price and forbids accepting payment beyond the value of work performed or materials delivered, unless a qualifying bond or "joint control" arrangement approved by the Registrar applies. New York (General Business Law 771 and Lien Law 71-a) requires a home improvement contractor to deposit progress payments received before completion in an escrow account or post a bond. Because payment to Donefy is payment to the provider (Section 2.2), collecting the full Total up front may be treated as the contractor receiving an advance payment. Options for counsel to evaluate: (a) in CA and NY home improvement projects, authorize or collect only the permitted down payment and then charge each milestone when it is submitted; (b) qualify Donefy's holding as an approved joint control (CA) or bond-equivalent (NY) arrangement; (c) restrict CA/NY home improvement projects to providers with qualifying bonds. Until resolved, these terms describe the national model. verify: https://www.cslb.ca.gov/Resources/IndustryBulletins/2022/Industry_Bulletin_Progress_Payment_Restrictions.pdf · https://law.justia.com/codes/california/code-bpc/division-3/chapter-9/article-10/section-7159-5 · https://newyork.public.law/laws/n.y._general_business_law_section_771 · https://ag.ny.gov/home-improvement-fact-sheet

5. Milestone release rules

5.1 Milestones. Each project has 1 to 6 milestones set in the accepted bid, each a whole percentage of the price. Milestones are completed and reviewed in order.

5.2 Submission. The provider submits a milestone with a note and at least one photo. This starts the client's 5-day review window.

5.3 Client options. Within 5 calendar days after submission the client may:

• Accept - the milestone amount, less the provider fee, is released to the provider;
• Request changes - with a written note; the milestone goes back to the provider, who may fix and resubmit (which starts a new 5-day window); or
• Open a dispute - the milestone is paused for Donefy mediation (Section 6).

5.4 Reminders. Donefy reminds the client on day 2 and day 4 of the window.

5.5 Automatic acceptance. If the client does not act within 5 days of submission, the milestone is accepted automatically and released. Donefy records this as a system decision. Clients who are travelling or unavailable should open a dispute or request changes before the window ends rather than let it lapse.

5.6 Second change request. A second change request on the same milestone automatically opens a dispute.

5.7 Disputed milestones never auto-release.

5.8 Final release. When every milestone is released, refunded or split, the project is complete and reviews open.

5.9 Holding period. Donefy will not hold funds for a project longer than [X] days after payment. If a project stalls (for example, no milestone submitted for [60] days and no response from the provider), Donefy may treat it as abandoned, notify both parties, and resolve the remaining funds through the dispute process.

6. Disputes and Donefy mediation

6.1 Opening a dispute. A client may open a dispute on a submitted milestone at any time before it is released. A dispute also opens automatically on a second change request.

6.2 Process. Donefy notifies both parties and asks for evidence (messages, photos, the Project Agreement, change orders, inspection reports, invoices for materials). Each party normally has 5 business days to respond. Donefy may ask for more information, suggest a fix, or arrange an independent inspection at its discretion. Donefy aims to decide within [15] business days of receiving both parties' evidence.

6.3 Decision. Donefy decides how the disputed milestone amount is handled:

• Release - all to the provider (less the provider fee);
• Refund - all to the client; or
• Split - part released (less the provider fee on that part) and part refunded.

The released and refunded parts always add up to the milestone amount. Donefy explains its decision in writing.

6.4 Criteria. Donefy decides in good faith based on the Project Agreement, agreed changes, the evidence, the value of work performed and materials delivered, workmanship standards for the trade, and applicable law.

6.5 Authority. The provider authorizes Donefy, as its agent, to refund amounts under a decision. The client agrees that Donefy's decision resolves the client's claim to the held funds.

6.6 Limits. Donefy's decision is not a court judgment or arbitration award between the client and the provider. It does not decide claims beyond the held funds, and each party keeps its other legal rights and remedies against the other (including small claims court, licensing board complaints, warranty claims and lien rights). Donefy is not liable to either party for a decision made in good faith under these terms.

6.7 Remaining milestones. While a dispute is open, the next milestones cannot be submitted. If the dispute shows the project cannot continue, Donefy may also resolve the remaining unreleased milestones in the same decision, after giving both parties an opportunity to be heard.

7. Cancellations and refunds

7.1 Before payment. No money is taken; either party may cancel the award.

7.2 After payment, before any milestone is submitted. The client may cancel and receives a refund of the project price. Donefy keeps the client service fee, except: (a) if the provider withdraws, fails to start within [7] days of the agreed start date, or is removed from the Platform, Donefy refunds the client service fee too; and (b) see 7.3.

7.3 Statutory cancellation. Where the law gives the client a right to cancel the Project Agreement (for example, three business days after signing for certain home improvement contracts in California, New York and Texas, or five days for certain California homeowners aged 65 or older), and the client cancels in time, Donefy refunds the full Total including the client service fee, within the period required by law (10 days in California and New York unless counsel confirms otherwise).

7.4 After work starts. Released milestones cannot be refunded through Donefy. Unreleased funds are handled through the dispute process.

7.5 Refund timing. Refunds return to the original payment method, normally within 5 to 10 business days after processing.

8. Chargebacks and payment reversals

8.1 Use the dispute process first. Clients agree to use Donefy's dispute process before asking their card issuer or bank to reverse a payment, except in cases of unauthorized use of their card or account.

8.2 Card issuer disputes. If a client files a chargeback, Donefy may pause unreleased milestones for the project, submit evidence (including the signed Project Agreement, milestone photos and acceptance records) and share information with the processor and issuer as needed.

8.3 Allocation of losses. If a chargeback is decided against Donefy for funds already released to the provider, and the chargeback results from the provider's failure to perform, misrepresentation or breach, the provider must repay the released amount and Donefy may recover it from future releases or as otherwise allowed by law. If the chargeback results from client fraud or abuse (for example, a chargeback filed after accepting the work), Donefy bears the loss as to the provider and may pursue the client and close the client's account. Chargeback fees charged by the processor are borne by the party at fault, as Donefy reasonably determines.

9. Records and statements

Donefy keeps a ledger for each project showing the charge, fees, transfers and refunds, and shows each party their own entries. Providers can view releases, fees and net amounts in the Pro app. Donefy keeps payment records for at least [7] years.

10. Unclaimed funds

If Donefy cannot release funds to a provider (for example, the payout account is closed) or refund a client, it will try to contact the party for at least [90] days and then handle the funds as required by applicable unclaimed property laws.

11. Changes

Changes to these terms apply only to projects paid after the change takes effect.

Notes for counsel: agent-of-payee model, state by state (not part of the terms)