Client Using Your App, Website or Marketing Work Without Paying? How Agencies & IT Firms Recover Stuck Payments

1. The Short Answer

2. The “Endless Changes” Tactic

“We'll pay once these last changes are done” is the most common way IT and agency payments get stuck. Each round of changes pushes the payment date, and the client keeps using the work in the meantime. The law looks at what was agreed and what happened:

• Scope. Your proposal, statement of work or quotation email defines what you agreed to build. Requests outside it are new work, which the client must pay for separately. They are not a reason to hold back payment for what was delivered.
• Acceptance. If your contract has a user acceptance period (say, 7 days to report defects, otherwise deemed accepted), check whether it has passed. Even without one, a client that launches the site, publishes the app or runs the campaign is treating the work as accepted.
• Defects vs wishes. Genuine bugs in agreed features are your responsibility to fix. A new colour scheme, extra pages or another integration are not.

Put this in writing now. Send one email that records the delivery and go-live dates, separates real defects (with a date to fix them) from new requests (with a quote), and asks for the milestone payment by a fixed date. That email becomes evidence later.

3. Who Owns the Code and Designs Until You're Paid?

Under Section 17 of the Copyright Act, 1957, the author of a work is generally its first owner. Your employees' work belongs to your company, and when your company builds something for a client as an independent contractor, your company usually owns the copyright. It passes to the client only through a written, signed assignment (Sections 18 and 19). So the answer depends on your contract:

Two caveats. First, third-party and open-source components inside your work are not yours to claim. Second, for photographs, videos and films made for a client for payment, Section 17 makes the client the first owner unless the contract says otherwise. Marketing agencies doing shoots should check this before relying on copyright.

4. The Payment and Copyright Notice

When you still own the IP, your lawyer's notice can do more than demand money. A well-drafted notice:

• lists the milestones, deliveries, go-live date and invoices, with the exact amount due and interest;
• records that out-of-scope requests were quoted separately and are not a reason to withhold payment;
• states that under the contract the client has no right to use, copy or modify the code, designs or creatives until it pays in full;
• demands payment within a deadline, failing which the client must stop using the work; and
• reserves your rights to a civil suit for infringement and recovery, including an injunction and damages under Section 55 of the Copyright Act.

For a business that depends on its live website or app, the risk of an injunction usually changes the conversation. If the client keeps using the work after the notice, your lawyer can ask the court for an injunction. Where infringing copies are hosted by a third party, the law also provides a notice route to the hosting intermediary, which then needs a court order within a short period to keep the content down. That is a step for your lawyer, not a DIY threat.

You can send an unpaid IT, web development, or agency invoice legal notice via LegalRecovery.in, our online notice service, delivered by Speed Post, email and WhatsApp.

5. Can You Switch Off the Website or App?

This is the first thing most founders want to do, and it is where many turn a strong case into a weak one. Under Sections 43 and 66 of the Information Technology Act, 2000, accessing, disrupting or damaging someone else's computer system without permission can make you liable for compensation and even prosecution. An unpaid invoice is not permission.

6. Marketing Retainers and Ad Spend

Digital marketing agencies have a different problem: there is no single “delivery,” just months of work. Your proof is the trail you already keep: the signed proposal or retainer email, monthly reports, campaign dashboards, approvals of creatives on email or WhatsApp, and the client's own use of the leads or content.

• Notice period. If your agreement requires 30 days' notice to end the retainer, the client usually owes that month even if it stops replying.
• Ad spend you paid. If you ran ads on your own card for the client, that is a separate, easily proven debt. Keep the platform invoices.
• Accounts and assets. Ad accounts, pages and domains set up in the client's name belong to the client. Do not hold them hostage; claim your money instead.

7. If They Still Don't Pay

• MSME Samadhaan. Many IT firms and agencies are Udyam-registered micro or small service enterprises. If you were registered before the work, the client must pay within 45 days at most and owes interest at three times the RBI bank rate after that. See our MSME 45-day payment guide.
• Mediation and a fast-track suit. For commercial claims of ₹3 lakh or more, pre-institution mediation is compulsory before a Commercial Court suit, and a summary suit under Order 37 CPC may be possible. Our guide on recovering an unpaid invoice after delivery walks through the steps.
• Large dues from a company. If a company owes you ₹1 crore or more without a genuine dispute, an insolvency demand notice may apply. See legal action when a company is not paying your bill.
• Copyright suit. Where you still own the IP, a suit for injunction and damages can run with your money claim.
• Overseas client. For US, UK, Middle East or other foreign clients, the route depends on your contract's governing law and the client's country. You can send a legal notice to an international client for an unpaid invoice as the first step. Our foreign buyer and export recovery guide covers where you can sue and the bank and GST rules.

You generally have three years from the due date to file a recovery suit. A written acknowledgement of the dues by the client, or a part-payment, restarts that period.

8. Protect Your Next Project

Five clauses that prevent most of these disputes:

1. IP transfers on full payment, with a licence to use only while payments are current.
2. Deemed acceptance if no defects are reported within a fixed number of days, and on go-live.
3. Change requests priced separately, with a rate card.
4. Right to suspend hosted services and support after written notice for unpaid invoices.
5. Interest, jurisdiction and dispute resolution: late payment interest, the city whose courts will hear disputes, and arbitration if you want it.

Freelancers working alone can also read our broader freelancer payment recovery guide.

9. Frequently Asked Questions