The predatory housing scam infecting the nation

It's up for a vote in Florida after passing in Texas and several cities

Welcome to a Sunday edition of Progress Report.

Nowhere is it more expensive to be poor than in the United States, with its tattered, threadbare social safety net and mostly toothless labor laws providing little in the way of assistance or opportunity. Save for a blip of necessary largesse during the early days of the pandemic, the price of poverty has only continued to grow in the US, with governmental indifference shifting into a more explicit malice.

Instead of just casting working people aside, many legislatures and local governments are now helping powerful financial interests to set traps that can further exploit the people who can least afford to be hit with large and unexpected bills. In today’s story, we’re exposing a brazen scheme that is catching on with lawmakers due to a combination of shameless astroturf marketing and the influence of some of the biggest private equity companies in the world.

Believe me, you’ll want to read this one.

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by Jackson Oberlink

Once seen as a sunny, budget-friendly place to raise a family, Florida has in recent years been stretched to extremes; with no income taxes and a state government slavishly devoted to servicing corporate greed, our state has become a warm landing place for Wall Street billionaires even as it grows increasingly inhospitable for working people.

Last year, Florida became the most unaffordable state in the country, in large part because renters like me are facing skyrocketing rents at the mercy of faceless corporate landlords. Polls show that housing affordability is top of mind for the state’s voters, and with Republicans boasting a state government trifecta, they’re using the crisis as an opportunity for misleading pseudo-populist scams masquerading as solutions to problems manufactured by those that stand to benefit.

One crisis they’re seeking to exacerbate and squeeze for more profit is the abuse of security deposits. 

Despite advocacy from renters, tenant attorneys, and allied lawmakers, there are currently no limits to security deposits in Florida. There are countless horror stories from communities across the state. Landlords require everything from two months' rent to two paychecks as a security deposit; in New York, by comparison, a landlord is now limited to asking for one month’s rent. 

Instead of enacting their own fair limits, the Florida legislature is poised to embrace a new product known as a “security deposit alternative” that allows investors to make even more money off of tenants. 

Here’s how the scam work: Equity-backed startups such as Leaselock and Rhino allow renters to buy a "policy" or pay a fee to the landlord instead of shelling out a full security deposit upfront. There is no cap on the fee, which is based on income and credit history, but 

On face value, it sounds deceivingly appealing, knocking down a financial barrier for tenants looking for affordable housing. And that’s how “renters’ choice” is being sold, both in Florida and in astroturf campaigns that have targeted various cities and states with significant numbers of low-income families. But once the lease is signed and the keys are in the door, a “security deposit alternative” turns predatory, trapping renters into paying a poor tax similar to a payday lending scheme. 

Companies like Leaselock, Rhino, Jetty, and Assurant market these products to intentionally cause consumer confusion. Renters understandably think that the fees provide them with insurance coverage when in reality, the renter never receives their money back, and paying the fee does not protect the renter from alleged damages claimed by the landlord. Additionally, tenants would be offered no protection against potential litigation from the company used by the landlord for damages. The renter waives important protections associated with a true security deposit. 

In essence, instead of providing some sort of security, it is essentially a raid on working people, even in the event that they aren’t sued to cover damages.

These companies know their products are predatory. Leaselock's own website promotes their product as intended to “enhance the property revenue stream and optimize asset performance” for landlords, and their Advisory Board includes nefarious multinational corporate landlords and private equity firms known for predatory practices, including Greystar.

They’ve been touring the country, trying to sell “renter’s choice” as a legitimate movement and answer to the affordable housing crisis that exploded during the pandemic. In 2020, Cincinnati and Atlanta became the first municipalities to require that renters have the option to use “security deposit alternatives.” The companies have since cast their eyes on entire states to mixed fortunes. Texas Gov. Greg Abbott signed legislation backed by these companies in 2021, though the new law at least included consumer protections not currently in Florida’s bill. 

The product got an even icier reception in Maryland. In 2021, the mayor of Baltimore vetoed a City Council measure backing the product, and the following year, the state banned it altogether. But these companies are nothing if not persistent; this year, there have been “renters’ choice” bills filed in over a dozen states.

Here in Florida, we’re in the legislative trenches right now, fighting these predatory companies’ legislation. With a strong coalition of renters, tenant lawyers, and affordable housing advocates, we defeated them last year, and we’re determined to do it again.

We know these companies are already operating in Florida. These bills are dangerous because they aim to enshrine their junk fees into our state law and undermine local and state regulatory oversight. Hundreds of complaints against all these companies have been filed with the Better Business Bureau in the last twelve months. The complaints are diverse but center around the heart of the predatory scheme: “why am I paying all this money for nothing, and why can’t I get it back?”

There are solutions to the affordability crisis in Florida. Nothing in Florida law stops landlords from offering renters an option to pay their security deposit over a period of time. Florida could follow the lead in many states and limit the cost of security deposits. At the very least, the Florida legislature should limit security deposits to no more than one month’s rent. Working to lower the monthly rental costs in Florida will also act to reduce the security deposit. The “Keep Floridians Housed Act'' would enshrine all these basic rights and more.

But there is no limit to corporate greed, and their influence is far-reaching. Florida For All’s 2022 Price Out of Paradise report followed the money and found more than $90 million in campaign contributions to Governor Ron DeSantis and Republican leaders from developers, property insurers, and big real estate interests.

 For years, corporate landlords’ main lobbying group, the Florida Apartment Association (FAA), has worked to chip away at renters’ rights, and the protections we currently have are all at risk this legislative session. The FAA has backed several bills aiming to ban short-term local rent control, undermine local tenant protections such as right to rent increase notice and local tenant advocacy offices and remove legal liability for negligent landlords.

State government should be protecting consumers from these predatory practices, not enshrining their junk fees into law. The investors backing multinational corporate landlords hiking our rents are many of the same invested in these perpetual junk fee products, and many of the same behind a new credit card targeting renters, too. Much like company towns, their goal is to trap renters into a vicious payment cycle they control that we won’t be able to escape. All of these bills are many parts of one huge corporate grift, and it is renters who pay the price. But we know that when we organize and expose corporate greed, we can win.

Jackson Oberlink is a lifelong Floridian and a renter fighting to expose corporate greed and expand tenants’ rights in the state legislature. He is the Legislative Director of Florida For All.

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