Skip the apartment security deposit, pay a fee forever

A new generation of property-tech companies has reshaped what tenants pay at lease signing.

Instead of writing a $2,000 or $3,000 check that sits in a landlord's escrow account and (in theory) comes back at move-out, millions of renters are now enrolled in security deposit replacement (SDR) products — paying small monthly premiums or one-time fees that are non-refundable, that cover the landlord rather than the tenant, and that can land a tenant in collections long after the lease ends.

The biggest player, Rhino, merged with rival Jetty in February 2025 and now covers more than 6 million rental units, partnering with 47 of the country's 100 largest apartment operators including Greystar, UDR, and Morgan Properties.

A May 2026 National Consumer Law Center report titled Tenant Insecurity concluded that these products often leave tenants paying more and with fewer legal protections than a traditional deposit would provide.

Here's how the three main product types work — and where the credit-report risk lives.

The three flavors

Insurance / surety bonds. Rhino, Jetty Deposit, TheGuarantors, and SureDeposit sell what looks like insurance to the tenant but legally insures the landlord.

The tenant pays a non-refundable premium — Rhino starts around $4 per month per $1,000 of coverage; SureDeposit charges a one-time fee equal to 20%–35% of the deposit it replaces.

If the landlord files a claim for damage or unpaid rent and the insurer pays it, the insurer then turns around and pursues the tenant for full reimbursement through a process called subrogation.

Rhino's own tenant agreement puts it plainly: "The payment of Premium under this Agreement is not a security deposit, and is not insurance for my benefit. I will not receive the Premium payment back at the end of the Bond term."

Rhino's own marketing blog is even blunter: "Rhino is not a get-out-of-jail-free card. The only functional difference between Rhino and a security deposit is that instead of being financially responsible to the property owner, renters are now financially responsible to Rhino."

Deposit financing / installment loans. Jetty Rent — distinct from Jetty Deposit — is a true loan product: the company advances the deposit and the tenant repays it over months.

Jetty's legal terms state explicitly that the company "may report information about your payment history and loan account to credit bureaus," and that "late payments, missed payments, or other defaults on your account may be reflected in your credit report." A Jetty support page adds that unpaid balances are "charged off and sent to collections."

Billing authorization. Obligo, the most structurally different product, uses no insurance at all. The tenant links a bank account or card through Plaid, agreeing to be charged directly at move-out for any damages up to a capped amount.

The National Consumer Law Center (NCLC) flagged this model specifically: because Obligo "does not require any proof of claims from the landlord before using direct billing authorization to collect from tenants," renters can have funds debited from their account for charges they would have disputed in any other framework.

The credit-report problem

For most tenants, the credit risk arrives at one of three moments:

Subrogation collections. This is the dominant pattern with insurance-based products. A tenant pays $300 to $600 a year into Rhino for two or three years; at move-out the landlord files a $1,500 damage claim; Rhino pays the landlord and then sends the tenant a bill for the full $1,500.

If the tenant disputes or can't pay, the debt goes to a collection agency — and from there onto credit reports as a collection account that can suppress a credit score for up to seven years. The Better Business Bureau lists 346 complaints against Rhino over the past three years, 96 of them filed in the last 12 months. A Reddit r/legaladvice post from 2025 documents a tenant receiving a Rhino reimbursement demand for "wear and tear" 79 days after lease termination — outside the policy's own 60-day window — with the company threatening collections if the tenant didn't pay.

Direct credit-bureau reporting on loan products. Jetty Rent is the clearest example: it's a regulated installment loan, it reports monthly to Equifax, Experian, and TransUnion, and missed payments hit credit reports the same way a missed car payment would. Tenants enrolled in a building that offers both Jetty Deposit (the surety bond) and Jetty Rent (the loan) often don't understand which product they actually have.

Lawsuits and judgments. TheGuarantors, which covers more than 4 million units as a lease-guarantee provider, has BBB complaints documenting active collection pursuit and tenants pleading for the company not to report disputed balances to credit agencies. If a subrogation case goes to court and the tenant loses, the resulting judgment is a public record that credit-scoring models can pick up.

What regulators have done

Enforcement is uneven and mostly at the state level.

In January 2022, Maryland Attorney General Brian Frosh settled with LeaseLock, finding that the company's monthly-fee-in-lieu product violated Maryland's Security Deposit Law because deposits in the state must be refundable. The settlement required refunds to Maryland tenants and effectively banned LeaseLock from operating in the state.

In June 2022, Washington State enacted RCW 59.18.670 — the strongest tenant-protective law in the country on this issue. It requires the fee option to be strictly optional, prohibits landlords from using the tenant's choice as a basis for approval, and mandates written disclosure of whether the insurer can pursue the tenant for reimbursement.

Cincinnati passed the first "Renter's Choice" ordinance in January 2020, followed by Atlanta and Toledo. But Baltimore Mayor Brandon Scott vetoed a similar bill in May 2021, explaining that "the provision can hurt the very people that it is intended to help" — a rare public rejection of the industry's "win-win" framing.

A New York Assembly bill, A1431, remains in committee. The CFPB has not brought a dedicated enforcement action against an SDR company, though the NCLC's May 2026 report explicitly called on the Bureau to act.

What tenants can do

• Ask for the traditional deposit. In most states there's no law forcing you into an SDR product. The choice illusion is often the biggest problem; many tenants who simply ask for a cash-deposit option get it.
• Read the Tenant Acknowledgement Agreement before signing. The continued-liability language is in writing. Leasing-agent verbal assurances don't override it.
• Document the unit thoroughly at move-in and move-out — video walkthroughs, timestamped photos, written punch lists shared with the landlord. The single best defense against a subrogation demand is evidence that the damage wasn't yours.
• Set a calendar reminder to cancel auto-renewal. Rhino policies renew automatically; cancellation typically must happen at least 90 days before lease end.
• If a subrogation demand arrives, respond in writing immediately, requesting itemized documentation under the Fair Debt Collection Practices Act. Many state consumer-protection laws require collectors to validate the debt before reporting it.
• Check your credit report. Free weekly access is available at AnnualCreditReport.com. A collection account from a company you don't recognize may be a subrogated SDR claim.

The bottom line

These products solve a real problem — coming up with a $3,000 deposit in cash is a meaningful barrier for many tenants — but they do it by converting a refundable obligation into a string of non-refundable fees plus continued liability for any damages.

For tenants who move out clean, the math is straightforward: they've paid hundreds or thousands of dollars for nothing. For tenants who don't, the credit consequences can outlast the lease by years.

The NCLC's recommendation is straightforward: until federal or state law catches up with the industry, the safest move is the oldest one — pay the deposit, document everything, and demand it back.