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When Desereé Cundiff applied for her apartment complex in Augusta, Georgia, she could afford everything but the security deposit, which was over $900. Her property manager told her about a company called Rhino, which offered an alternative: pay a smaller fee once per month instead. She didn’t know much about it, but she knew it meant she wouldn’t have to pay money that she didn’t have.“It was great for people like me that couldn't afford to have a whole deposit,” she told Motherboard she thought at the time. Rhino allows users to pay monthly or annually; Cundiff opted to pay her first year’s cost of $221.82 up front, she said. When she renewed her lease for a second year, she paid monthly at $18.40 a month, which came out to about the same amount. But when her Rhino plan renewed last year, her premium went up to $47.83 a month, which would cost her $573.96 annually. Her payments over the course of three years at the apartment will total over $1,000, more than an upfront security deposit. And unlike a security deposit, she can’t get the money back. Cundiff still doesn’t know why her monthly payments ballooned to twice her original amount. In an email viewed by Motherboard, she asks why her monthly fee increased by $30 with no explanation. “This is so f’d up,” she said. Rhino responded that her rent went up “due to recent changes we’ve made to make our pricing model more accurate. In addition to the coverage details required by your landlord, a renter’s personal financial history is also considered when calculating the price.” Rhino said the changes “more heavily account for each renter’s personal financial inputs, including credit score and total credit history” and “once a quote has been calculated it cannot be manually adjusted or recalculated.”
A Rhino policy agreement viewed by Motherboard states the company uses information from consumer credit reports to generate insurance scores, including bankruptcies, number of revolving accounts and having bills in collection, which it receives from Equifax, another credit reporting company.“I feel it’s wrong and they take advantage of people that can't afford a different choice,” Cundiff said. “Apparently, it doesn't matter that I bust my ass to try to get my credit score above 600.” Cundiff’s story is not unique. In interviews with tenants using Rhino, experts, and a leaked presentation from Rhino executives, the picture emerges of a company that charges the most vulnerable people more money, which they will never get back, in order to “push deposits higher” for landlords, as one former executive put it. Rhino is one of a growing number of companies selling what it calls a “security deposit alternative.” The companies—which include LeaseLock and Jetty—offer the chance for tenants who can’t afford security deposits to instead pay monthly fees. Rhino’s Instagram account’s bio is “simplifying security deposits since 2016.” Its website copy states, “Rhino replaces your traditional security deposit with smart, affordable security deposit insurance.”However, its offerings bear little resemblance to security deposits—which are refundable—and it in fact advises clients that it is not a security deposit. It also does not insure the renter, only the landlord. An agreement that renters must sign says, in all-caps: “The surety program described in this agreement is for the benefit of your landlord only. It does not cover you. The premium, taxes and fees you pay are not a security deposit and will not be refunded to you [emphasis Motherboard’s].”Landlords can bill Rhino for damage to the apartment or nonpayment of rent up to the amount they’ve chosen to insure, and the company pays the landlord directly, leaving the tenant on the hook up to the insured amount. The company reserves the right to sue tenants to reimburse it for property damage or unpaid rent, although co-founder Ankur Jain—son of billionaire InfoSpace CEO Naveen Jain—told The Intercept that the company did not intend on doing so. Rhino was founded in 2017 by Ankur Jain and Paraag Sarva, with early investment coming from Kairos, Jain’s own venture capital fund. The company argues in its marketing that offering the service in lieu of security deposits will “free up” money that would otherwise be tied up in interest-bearing accounts, providing more financial freedom for tenants and providing landlords with reassurance that they will be paid for damage to their property.All of the tenants who spoke with Motherboard initially did not realize that Rhino only insures their landlord. “I feel they're kind of benefiting from the ambiguity,” said Eric Dunn, director of litigation at the National Housing Law Project.Media reports about Rhino have, for the most part, been glowing. Insider boasted that Rhino was “potentially making it easier to secure a rental.” A New York Times profile of Rhino’s co-founders said the company was “envisioning a rental market without security deposits as a way to lower housing costs, curb inequality and put money back in people’s pockets.”The company, along with LeaseLock, has been pushing bills across the country it calls “Renter’s Choice.” While the language varies, these bills require landlords to offer tenants a security deposit alternative, like Rhino, if they are requiring a security deposit. These bills have been passed in two states—Connecticut and Georgia, where Cundiff lives—and garnered support from elected officials in 17 more, according to a lobbying website started by the company.But renters, attorneys, and advocates who spoke to Motherboard said that Rhino’s presentation of its product as streamlined security deposit insurance for renters is misleading, since the fee is nonrefundable and tenants are never insured. The service also allows landlords to get around stringent rules regulating the size of security deposits and when they are returned. The company uses its own algorithm to set prices for customers based on “risk,” making it costlier for renters with poor credit. Using the algorithm to predict risk may circumvent fair credit reporting laws, which only cover credit reports and not proprietary algorithms, according to Hannah Holloway at Tech Equity Collaborative. Experts say the product that Rhino offers could more accurately be described as a type of bond, rather than insurance. Rhino reserves the right to hold renters financially responsible for any damage to the apartment, which means renters are billed by the company for damage to the apartment if it exceeds the coverage amount.“The big selling point for landlords is not having to go through the courts to get this money,” said Peter Matchette, a Baltimore advocate who opposed the company’s lobbying there.While the company boasts that it costs renters just a few dollars a month, tenants who spoke to Motherboard were paying as much as $57 a month and said they were not given a chance to appeal changes to their premium or learn what specific factors led to increases. “It's a perverse kind of insurance, almost like a bail bond,” Marika Dias, a housing attorney with the nonprofit Safety Net Project told Motherboard. “Tenants don't really have leverage, aren’t in a position of power to push back on something like this because they need the housing.”“It's kind of like a subprime mortgage,” said Matchette. “Where it's like, ‘we'll get you in the door real cheap’.”Materials viewed by Motherboard indicate that “well-to-do” renters pay lower Rhino premiums. There’s no way to know for sure how much more lower-income renters pay for the service compared to higher-income renters unless Rhino makes its data public, however, something no government has required of it. Rhino did not respond to repeated requests for comment and a detailed list of questions from Motherboard, including questions about how much tenants in different income brackets pay for its product and what percentage of tenants are paying at the lower rates that Rhino often advertises.While “Renter’s Choice” bills requiring companies such as Rhino be offered to tenants have already passed in several states with minimal pushback, renters in Baltimore, Maryland mounted vigorous opposition to a Renter’s Choice bill that passed in January, 2021 after being reportedly fast-tracked by council member Nick Mosby. Mosby moved to give the bill a preliminary and final vote on the same day after meeting with a Rhino lobbyist who had never formally registered as such, the Baltimore Brew reported.
“I feel it’s wrong and they take advantage of people that can't afford a different choice”
Baltimore Mayor Brandon Scott vetoed the legislation in May of 2021 after a coalition of tenant advocates including Baltimore Renters United pushed against it, saying it left renters vulnerable and would cost them more than a security deposit. “It really just leaves tenants consistently on the hook for even more money with very little oversight,” Caitlin Goldblatt, a Baltimore renter who organized against the bill in 2021, told Motherboard. She said that secretive lobbying and a lack of outreach to renters are part of the company’s political strategy.“It's really not something where they attempt to get a groundswell of support,” Goldblatt said. “The actual product is complicated enough that it kind of flies under the radar.”
Are you a tenant using Rhino or other security deposit replacement services? Motherboard wants to hear from you. Email Roshan Abraham at email@example.com or contact him using Signal at 646-657-8247.
During the successful campaign to get the “Renter’s Choice” law overturned, activists recorded a Rhino sales webinar for landlords in which the company described how it sets each tenants’ monthly premium and said “well-to-do” renters pay the least. In the webinar, which was viewed by Motherboard, former vice president of sales Eric Krauss (who left the company in May, according to his LinkedIn), tells landlords that the end of the eviction moratorium would be “good for you guys.” After repeating Rhino’s claim that $45 billion “sits idly in cash security deposits,” he says that “Rhino is also a great way for you guys to push deposits higher.”In another slide, Krauss puts four hypothetical renters on the screen, each with their location, rent, income, security deposit and policy amount. The monthly premiums displayed in the webinar range from $2.86 a month to $18.00 a month. A grid shows that Rhino determines its premiums based on the renter’s income, monthly rent, and the security deposit that the landlord sets.
“If you’re willing to let the renter move in, Rhino will write the policy”
“Rhino looks at the renter and underwrites them on a renter-by-renter basis,” Krauss says in the webinar. A recent college grad who is “seen as a higher risk” is going to have higher premiums, Krauss says. Krauss says in the webinar that the company does not reject applications, and “if you’re willing to let the renter move in, Rhino will write the policy.”Krauss states in the webinar that the company has grown out its support team so that landlords can reach them with any questions. For tenants, he says, “We now offer phone support, chat support, email support.” Near the end of the webinar, Krauss reads a question from a landlord: “Why would my renters who can afford a security deposit take Rhino, where they pay the policy and they don’t get it back?” Krauss responds that the company works with “Class A” properties where the renters have the money for a cash deposit, but they use Rhino anyway because “we have an algorithm to give them a price, if you are a well-to-do renter, the price on a $1,000 policy is going to be $3-4 bucks a month.” He suggests renters may choose to instead put their money in the stock market or pay down debt. Krauss also says that landlords can increase their insured amount—and the renter’s Rhino costs—at lease renewal if they view them as more risky.In the past year, the company has been difficult to get in touch with, Rhino users told Motherboard. Calls to a toll free number result in an automated message, asking users to go to its website. The website has an automated chat service that does not answer specific questions, instead auto populating with suggested queries. Motherboard confirmed all of this while trying to get in touch with the company. A Cincinnati tenant, Rebecca—she did not want her real name published out of privacy concerns—said she signed a 12-month Rhino agreement. When she tried to renew for another six months after the first year, she said that the company’s automated phone line sent her to the website’s automated chat. “I have never in the couple years I've been paying them money been able to speak with anybody at Rhino. It's bizarre,” Rebecca said.In February 2022, the company laid off 57 employees, amounting to over 20 percent of its staff, The Real Deal reported. In a message to The Real Deal, the company cited a desire to reach profitability faster. The company, which raised $95 million the year before, was valued at $500 million and had plans to go public.
Screengrab: Leaked Rhino presentation
The company’s co-founder and until recently its public face, Ankur Jain, left in December 2022 according to his LinkedIn. Jain is still CEO of Bilt Rewards, one of many services that have popped up to allow tenants to report their rent payments to credit agencies. The company’s other co-founder and CEO, Paraag Sarva, announced he was leaving in May in a LinkedIn post where he announced the company had secured an additional $30 million funding. He passed leadership on to Benjamin Lantos, former head of data analytics who was a partner at Kairos, Jain’s venture capital firm. Meanwhile, tenants have been getting bills from Rhino stemming from years-old accounts. Stefanie Price first signed up for Rhino in March of 2019. After separating from her husband and falling into debt, she didn’t have money for a security deposit on the $1,100 1-bedroom she moved into in Dallas, Texas. Rhino seemed like a good option, she told Motherboard. The company charged her around $25 a month, she said. But soon after moving in, she got a job in South Carolina and moved out of state. But Rhino kept charging her for the apartment she left behind. In October of 2019, Price filed for bankruptcy. Yet Rhino did not give up; a July email viewed by Motherboard from a Rhino support worker said that Price was liable for nine months of missed payments. As with other tenants who spoke to Motherboard, it took repeated attempts to reach someone in customer service to explain her situation, and no one was available to speak on the phone. “I just find it crazy that there's literally no way to talk to a person,” Price said.While Rhino frames its service as a matter of “choice,” renters and attorneys who spoke to Motherboard reported the opposite: property owners are telling renters they must use a Rhino policy. “The reality on the ground is that tenants aren't getting apartments unless they agree to doing Rhino,” Dias said. She said she’s encountered cases where several roommates apply for an apartment, and only the roommate with bad credit is forced to use Rhino.In 2020, Cincinnati passed a “Renter’s Choice” ordinance—one of Rhino’s first lobbying wins—requiring that landlords with more than 25 units who request a security deposit must also offer tenants an alternative, including a payment plan or “rental security insurance.” But the law does not work the other way around: landlords can offer an “alternative” like Rhino without requiring a security deposit, essentially forcing renters into the more costly product.Hunter Hersko-Fugitt, a renter living in Cincinnati, Ohio, used Rhino from 2021 until the end of 2022, while renting from a company called Gaslight Property. Because the unit he was renting was only $600 a month and because he has a stable income, Hersko-Fugitt’s monthly Rhino payments were only $3.50 a month. But when he moved out, the company kept charging the monthly payment. It also billed him for small problems around the apartment even months after he moved out, such as a $30 fee for damaged blinds to the apartment unit.In an email exchange viewed by Motherboard, Hersko-Fugitt was told by a Rhino representative that the only way to stop the monthly payments—for an apartment where he no longer lived—was to settle up all bills for damages and late fees. “I'm pretty sure I paid that fee to them directly months ago, but I don't really care to fight it anymore,” Herkso-Fuggitt said in an email to Rhino. The company accepted the payment.He can afford the fees, but is concerned the company will send the bills to a credit agency if he doesn’t pay. “I really don't want it to hit my credit,” he said. There’s little information about how many renters are using security deposit alternatives like Rhino’s. In the leaked webinar, Krauss claimed that Rhino was being used in about 1.2 million units across the country.Cities have few regulations for companies like Rhino which, critics fear, can be used as a workaround for landlords who want to avoid security deposit regulations and laws that allow renters to withhold payments to bad landlords. (Rhino’s product also insures landlords against non-payment of rent.)“One of the big problems with these products is it can be a way of circumventing all these renter protections,” said Dunn.While laws around security deposits vary from state to state, some jurisdictions require move-in and move-out inspections, and some charge landlords money if they don’t refund a security deposit in a reasonable time, neither of which apply to Rhino. While many cities regulate how security deposits work, most cities don’t regulate how much products like Rhino can charge renters. Cincinnati’s “Renter’s Choice” law limits the total claim coverage of products like Rhino’s to “the amount the landlord requires for security deposits,” but neither city nor Ohio law specify a limit for security deposits. “I think it's fair to say that it is unregulated,” Dias said. Only one state seems to have taken legal action against companies offering these services: the Maryland attorney general reached a settlement with LeaseLock for violating its security deposit law because the law requires that security deposits be refundable. The company was forced to repay the monthly payments taken from tenants and stop operating in Maryland. Rhino’s ability to set, and change its monthly premium—and its proprietary algorithm for assessing risk—put it in a gray area for consumer protections. While the federal Fair Credit Reporting Act allows any consumer to request a copy of their credit report and contest any inaccurate information, it doesn’t cover algorithmic screening systems from third parties, which, like Rhino, may follow a formula that is obscured from the consumer.“If the information on your report isn't inaccurate or accurate, it's simply hypothetical or aggregated from other people's tenant information, that becomes a complicated question,” said Hannah Holloway, director of policy and research at Tech Equity Collaborative. Whereas a credit report uses information specific to a tenant, algorithmic risk scores potentially contain external information that tenants can’t individually refute.The result is that tenants whose rental history and finances are good are left wondering why they’re being charged high rates by Rhino. This was the case with Jenessa, a renter in Homestead, Florida who spoke to Motherboard.She was told when she moved into her rental unit 8 months ago that, due to her credit, she could either sign up for Rhino or pay four months’ rent up front for a security deposit. She pays $1,650 a month for a 2 bedroom apartment, so that would have cost her $6,600. She chose Rhino and was designated an annual premium of $746.59, according to an agreement viewed by Motherboard. And while it would take Jenessa years to pay Rhino an amount equal to the quoted deposit, unlike a deposit, she will never get money paid to Rhino back. Jenessa’s exorbitantly high security deposit—most landlords only charge one month’s rent—also demonstrates how landlords can essentially force tenants into using Rhino, despite the fact that Rhino makes renters sign a document stating they are using the service willingly as an alternative to a deposit.Jenessa uses a Section 8 voucher, a federal subsidy for low-income tenants that has been the subject of rampant discrimination from landlords. She thinks this is why she was asked to pay such a high security deposit, essentially forcing her to use Rhino.According to Rhino's “Renters Choice” website, 17 different states have city or state level support for the legislation. Former Los Angeles Mayor Eric Garcetti and former New York City mayor Bill de Blasio are listed as supporters.“Imagine if you only paid a little bit each month for all the time you were a tenant, so you never had to shell out a big chunk of money. There's a law that could give you that right and you could say goodbye to security deposits,” De Blasio is quoted as saying.In July, the Biden administration introduced executive actions targeting “junk fees,” extra expenses on top of rent added by property managers and landlords. The administration secured agreements from Apartments.com and other listing sites to make the fees explicit. But it’s not clear if this would cover security deposit alternatives handled by third parties. To Cundiff, Rhino’s priorities are clear. She wishes she could just afford her landlord’s roughly $900 security deposit so that her Rhino payments would end. “I don't like how they're basically holding us over a boiling pot,” Cundiff said. “It's just ridiculous that I'm ending up having to pay so much just because we're poor. To me it feels like they're trying to keep people poor.”In addition to banning security deposits altogether, cities could just pay them. That’s what Baltimore did shortly after its mayor vetoed the so-called Renter’s Choice legislation, offering to pay deposits for people making under 80 percent of the area median income. “They never think of just giving poor people money. That’s more often the answer to how to deal with people struggling to pay for things,” Matchette said.
“I think it's fair to say that it is unregulated”