When Desereé Cundiff utilized for her condominium advanced in Augusta, Georgia, she might afford all the pieces however the safety deposit, which was over $900. Her property supervisor instructed her about an organization known as Rhino, which provided an alternate: pay a smaller price as soon as monthly as a substitute. She didn’t know a lot about it, however she knew it meant she wouldn’t should pay cash that she didn’t have.
“It was nice for individuals like me that could not afford to have a complete deposit,” she instructed Motherboard she thought on the time.
Rhino permits customers to pay month-to-month or yearly; Cundiff opted to pay her first 12 months’s value of $221.82 up entrance, she stated. When she renewed her lease for a second 12 months, she paid month-to-month at $18.40 a month, which got here out to about the identical quantity. However when her Rhino plan renewed final 12 months, her premium went as much as $47.83 a month, which might value her $573.96 yearly. Her funds over the course of three years on the condominium will whole over $1,000, greater than an upfront safety deposit. And in contrast to a safety deposit, she will’t get the cash again.
Cundiff nonetheless doesn’t know why her month-to-month funds ballooned to twice her authentic quantity. In an e mail considered by Motherboard, she asks why her month-to-month price elevated by $30 with no rationalization. “That is so f’d up,” she stated. Rhino responded that her hire went up “because of latest adjustments we’ve made to make our pricing mannequin extra correct. Along with the protection particulars required by your landlord, a renter’s private monetary historical past can also be thought-about when calculating the worth.”
Rhino stated the adjustments “extra closely account for every renter’s private monetary inputs, together with credit score rating and whole credit score historical past” and “as soon as a quote has been calculated it can’t be manually adjusted or recalculated.”
“I really feel it’s incorrect they usually reap the benefits of individuals that may’t afford a special selection”
A Rhino coverage settlement considered by Motherboard states the corporate makes use of data from client credit score studies to generate insurance coverage scores, together with bankruptcies, variety of revolving accounts and having payments in assortment, which it receives from Equifax, one other credit score reporting firm.
“I really feel it’s incorrect they usually reap the benefits of individuals that may’t afford a special selection,” Cundiff stated. “Apparently, it would not matter that I bust my ass to attempt to get my credit score rating above 600.”
Cundiff’s story is just not distinctive. In interviews with tenants utilizing Rhino, specialists, and a leaked presentation from Rhino executives, the image emerges of an organization that fees probably the most weak individuals extra money, which they may by no means get again, so as to “push deposits greater” for landlords, as one former government put it.
Rhino is certainly one of a rising variety of firms promoting what it calls a “safety deposit various.” The businesses—which embrace LeaseLock and Jetty—supply the possibility for tenants who can’t afford safety deposits to as a substitute pay month-to-month charges.
Rhino’s Instagram account’s bio is “simplifying safety deposits since 2016.” Its web site copy states, “Rhino replaces your conventional safety deposit with sensible, reasonably priced safety deposit insurance coverage.”
Nevertheless, its choices bear little resemblance to safety deposits—that are refundable—and it in reality advises shoppers that it isn’t a safety deposit. It additionally doesn’t insure the renter, solely the owner. An settlement that renters should signal says, in all-caps: “The surety program described on this settlement is for the advantage of your landlord solely. It doesn’t cowl you. The premium, taxes and costs you pay aren’t a safety deposit and won’t be refunded to you [emphasis Motherboard’s].”
Landlords can invoice Rhino for injury to the condominium or nonpayment of hire as much as the quantity they’ve chosen to insure, and the corporate pays the owner immediately, leaving the tenant on the hook as much as the insured quantity. The corporate reserves the best to sue tenants to reimburse it for property injury or unpaid hire, though co-founder Ankur Jain—son of billionaire InfoSpace CEO Naveen Jain—instructed The Intercept that the corporate didn’t intend on doing so.
Rhino was based in 2017 by Ankur Jain and Paraag Sarva, with early funding coming from Kairos, Jain’s personal enterprise capital fund. The corporate argues in its advertising that providing the service in lieu of safety deposits will “release” cash that might in any other case be tied up in interest-bearing accounts, offering extra monetary freedom for tenants and offering landlords with reassurance that they are going to be paid for injury to their property.
All the tenants who spoke with Motherboard initially didn’t notice that Rhino solely insures their landlord. “I really feel they’re sort of benefiting from the anomaly,” stated Eric Dunn, director of litigation on the Nationwide Housing Regulation Undertaking.
Media studies about Rhino have, for probably the most half, been glowing. Insider boasted that Rhino was “probably making it simpler to safe a rental.” A New York Occasions profile of Rhino’s co-founders stated the corporate was “envisioning a rental market with out safety deposits as a technique to decrease housing prices, curb inequality and put a refund in individuals’s pockets.”
The corporate, together with LeaseLock, has been pushing payments throughout the nation it calls “Renter’s Alternative.” Whereas the language varies, these payments require landlords to supply tenants a safety deposit various, like Rhino, if they’re requiring a safety deposit. These payments have been handed in two states—Connecticut and Georgia, the place Cundiff lives—and garnered assist from elected officers in 17 extra, in line with a lobbying web site began by the corporate.
However renters, attorneys, and advocates who spoke to Motherboard stated that Rhino’s presentation of its product as streamlined safety deposit insurance coverage for renters is deceptive, for the reason that price is nonrefundable and tenants are by no means insured. The service additionally permits landlords to get round stringent guidelines regulating the dimensions of safety deposits and when they’re returned.
The corporate makes use of its personal algorithm to set costs for purchasers based mostly on “threat,” making it costlier for renters with poor credit score. Utilizing the algorithm to foretell threat might circumvent honest credit score reporting legal guidelines, which solely cowl credit score studies and never proprietary algorithms, in line with Hannah Holloway at Tech Fairness Collaborative.
Consultants say the product that Rhino provides might extra precisely be described as a sort of bond, quite than insurance coverage. Rhino reserves the best to carry renters financially answerable for any injury to the condominium, which suggests renters are billed by the corporate for injury to the condominium if it exceeds the protection quantity.
“The large promoting level for landlords is just not having to undergo the courts to get this cash,” stated Peter Matchette, a Baltimore advocate who opposed the corporate’s lobbying there.
Whereas the corporate boasts that it prices renters only a few {dollars} a month, tenants who spoke to Motherboard have been paying as a lot as $57 a month and stated they weren’t given an opportunity to enchantment adjustments to their premium or be taught what particular elements led to will increase.
“It is a perverse sort of insurance coverage, virtually like a bail bond,” Marika Dias, a housing legal professional with the nonprofit Security Internet Undertaking instructed Motherboard. “Tenants do not actually have leverage, aren’t ready of energy to push again on one thing like this as a result of they want the housing.”
“It is sort of like a subprime mortgage,” stated Matchette. “The place it is like, ‘we’ll get you within the door actual low cost’.”
Supplies considered by Motherboard point out that “well-to-do” renters pay decrease Rhino premiums. There’s no technique to know for certain how far more lower-income renters pay for the service in comparison with higher-income renters except Rhino makes its information public, nonetheless, one thing no authorities has required of it.
Rhino didn’t reply to repeated requests for remark and an in depth listing of questions from Motherboard, together with questions on how a lot tenants in several revenue brackets pay for its product and what number of tenants are paying on the decrease charges that Rhino typically advertises.
Whereas “Renter’s Alternative” payments requiring firms comparable to Rhino be provided to tenants have already handed in a number of states with minimal pushback, renters in Baltimore, Maryland mounted vigorous opposition to a Renter’s Alternative invoice that handed in January, 2021 after being reportedly fast-tracked by council member Nick Mosby. Mosby moved to present the invoice a preliminary and closing vote on the identical day after assembly with a Rhino lobbyist who had by no means formally registered as such, the Baltimore Brew reported.
Baltimore Mayor Brandon Scott vetoed the laws in Could of 2021 after a coalition of tenant advocates together with Baltimore Renters United pushed towards it, saying it left renters weak and would value them greater than a safety deposit.
“It actually simply leaves tenants persistently on the hook for much more cash with little or no oversight,” Caitlin Goldblatt, a Baltimore renter who organized towards the invoice in 2021, instructed Motherboard. She stated that secretive lobbying and a scarcity of outreach to renters are a part of the corporate’s political technique.
“It is actually not one thing the place they try and get a groundswell of assist,” Goldblatt stated. “The precise product is sophisticated sufficient that it sort of flies beneath the radar.”
“In case you’re prepared to let the renter transfer in, Rhino will write the coverage”
Through the profitable marketing campaign to get the “Renter’s Alternative” legislation overturned, activists recorded a Rhino gross sales webinar for landlords during which the corporate described the way it units every tenants’ month-to-month premium and stated “well-to-do” renters pay the least. Within the webinar, which was considered by Motherboard, former vice chairman of gross sales Eric Krauss (who left the corporate in Could, in line with his LinkedIn), tells landlords that the top of the eviction moratorium can be “good for you guys.” After repeating Rhino’s declare that $45 billion “sits idly in money safety deposits,” he says that “Rhino can also be an effective way for you guys to push deposits greater.”
In one other slide, Krauss places 4 hypothetical renters on the display screen, every with their location, hire, revenue, safety deposit and coverage quantity. The month-to-month premiums displayed within the webinar vary from $2.86 a month to $18.00 a month. A grid exhibits that Rhino determines its premiums based mostly on the renter’s revenue, month-to-month hire, and the safety deposit that the owner units.
Screengrab: Leaked Rhino presentation
“Rhino seems to be on the renter and underwrites them on a renter-by-renter foundation,” Krauss says within the webinar. A latest school grad who’s “seen as a better threat” goes to have greater premiums, Krauss says. Krauss says within the webinar that the corporate doesn’t reject purposes, and “in case you’re prepared to let the renter transfer in, Rhino will write the coverage.”
Krauss states within the webinar that the corporate has grown out its assist workforce in order that landlords can attain them with any questions. For tenants, he says, “We now supply telephone assist, chat assist, e mail assist.”
Close to the top of the webinar, Krauss reads a query from a landlord: “Why would my renters who can afford a safety deposit take Rhino, the place they pay the coverage they usually don’t get it again?”
Krauss responds that the corporate works with “Class A” properties the place the renters have the cash for a money deposit, however they use Rhino anyway as a result of “we’ve an algorithm to present them a worth, if you’re a well-to-do renter, the worth on a $1,000 coverage goes to be $3-4 bucks a month.” He suggests renters might select to as a substitute put their cash within the inventory market or pay down debt. Krauss additionally says that landlords can improve their insured quantity—and the renter’s Rhino prices—at lease renewal in the event that they view them as extra dangerous.
Previously 12 months, the corporate has been tough to get in contact with, Rhino customers instructed Motherboard. Calls to a toll free quantity end in an automatic message, asking customers to go to its web site. The web site has an automatic chat service that doesn’t reply particular questions, as a substitute auto populating with recommended queries. Motherboard confirmed all of this whereas attempting to get in contact with the corporate.
A Cincinnati tenant, Rebecca—she didn’t need her actual title printed out of privateness considerations—stated she signed a 12-month Rhino settlement. When she tried to resume for an additional six months after the primary 12 months, she stated that the corporate’s automated telephone line despatched her to the web site’s automated chat.
“I’ve by no means within the couple years I have been paying them cash been capable of converse with anyone at Rhino. It is weird,” Rebecca stated.
In February 2022, the corporate laid off 57 staff, amounting to over 20 % of its employees, The Actual Deal reported. In a message to The Actual Deal, the corporate cited a need to achieve profitability quicker. The corporate, which raised $95 million the 12 months earlier than, was valued at $500 million and had plans to go public.
“I feel it is honest to say that it’s unregulated”
The corporate’s co-founder and till just lately its public face, Ankur Jain, left in December 2022 in line with his LinkedIn. Jain remains to be CEO of Bilt Rewards, certainly one of many providers which have popped as much as enable tenants to report their hire funds to credit score businesses. The corporate’s different co-founder and CEO, Paraag Sarva, introduced he was leaving in Could in a LinkedIn put up the place he introduced the corporate had secured an extra $30 million funding. He handed management on to Benjamin Lantos, former head of knowledge analytics who was a companion at Kairos, Jain’s enterprise capital agency.
In the meantime, tenants have been getting payments from Rhino stemming from years-old accounts. Stefanie Value first signed up for Rhino in March of 2019. After separating from her husband and falling into debt, she didn’t have cash for a safety deposit on the $1,100 1-bedroom she moved into in Dallas, Texas. Rhino appeared like a superb possibility, she instructed Motherboard.
The corporate charged her round $25 a month, she stated. However quickly after shifting in, she obtained a job in South Carolina and moved out of state. However Rhino stored charging her for the condominium she left behind. In October of 2019, Value filed for chapter. But Rhino didn’t hand over; a July e mail considered by Motherboard from a Rhino assist employee stated that Value was responsible for 9 months of missed funds.
As with different tenants who spoke to Motherboard, it took repeated makes an attempt to achieve somebody in customer support to elucidate her state of affairs, and nobody was obtainable to talk on the telephone. “I simply discover it loopy that there is actually no technique to discuss to an individual,” Value stated.
Whereas Rhino frames its service as a matter of “selection,” renters and attorneys who spoke to Motherboard reported the alternative: property house owners are telling renters they need to use a Rhino coverage.
“The fact on the bottom is that tenants do not get residences except they comply with doing Rhino,” Dias stated. She stated she’s encountered instances the place a number of roommates apply for an condominium, and solely the roommate with below-average credit is compelled to make use of Rhino.
In 2020, Cincinnati handed a “Renter’s Alternative” ordinance—certainly one of Rhino’s first lobbying wins—requiring that landlords with greater than 25 items who request a safety deposit should additionally supply tenants an alternate, together with a cost plan or “rental safety insurance coverage.” However the legislation doesn’t work the opposite approach round: landlords can supply an “various” like Rhino with out requiring a safety deposit, primarily forcing renters into the extra pricey product.
Hunter Hersko-Fugitt, a renter dwelling in Cincinnati, Ohio, used Rhino from 2021 till the top of 2022, whereas renting from an organization known as Gaslight Property. As a result of the unit he was renting was solely $600 a month and since he has a steady revenue, Hersko-Fugitt’s month-to-month Rhino funds have been solely $3.50 a month. However when he moved out, the corporate stored charging the month-to-month cost. It additionally billed him for small issues across the condominium even months after he moved out, comparable to a $30 price for broken blinds to the condominium unit.
In an e mail change considered by Motherboard, Hersko-Fugitt was instructed by a Rhino consultant that the one technique to cease the month-to-month funds—for an condominium the place he now not lived—was to settle up all payments for damages and late charges. “I am fairly certain I paid that price to them immediately months in the past, however I do not actually care to battle it anymore,” Herkso-Fuggitt stated in an e mail to Rhino. The corporate accepted the cost.
He can afford the charges, however is anxious the corporate will ship the payments to a credit score company if he doesn’t pay. “I actually don’t need it to hit my credit score,” he stated.
There’s little details about what number of renters are utilizing safety deposit alternate options like Rhino’s. Within the leaked webinar, Krauss claimed that Rhino was being utilized in about 1.2 million items throughout the nation.
Cities have few rules for firms like Rhino which, critics concern, can be utilized as a workaround for landlords who wish to keep away from safety deposit rules and legal guidelines that enable renters to withhold funds to dangerous landlords. (Rhino’s product additionally insures landlords towards non-payment of hire.)
“One of many large issues with these merchandise is it may be a approach of circumventing all these renter protections,” stated Dunn.
Whereas legal guidelines round safety deposits fluctuate from state to state, some jurisdictions require move-in and move-out inspections, and a few cost landlords cash in the event that they don’t refund a safety deposit in an affordable time, neither of which apply to Rhino. Whereas many cities regulate how safety deposits work, most cities don’t regulate how a lot merchandise like Rhino can cost renters. Cincinnati’s “Renter’s Alternative” legislation limits the full declare protection of merchandise like Rhino’s to “the quantity the owner requires for safety deposits,” however neither metropolis nor Ohio legislation specify a restrict for safety deposits.
“I feel it is honest to say that it’s unregulated,” Dias stated.
Just one state appears to have taken authorized motion towards firms providing these providers: the Maryland legal professional common reached a settlement with LeaseLock for violating its safety deposit legislation as a result of the legislation requires that safety deposits be refundable. The corporate was compelled to repay the month-to-month funds taken from tenants and cease working in Maryland.
Rhino’s skill to set, and alter its month-to-month premium—and its proprietary algorithm for assessing threat—put it in a grey space for client protections. Whereas the federal Truthful Credit score Reporting Act permits any client to request a replica of their credit score report and contest any inaccurate data, it doesn’t cowl algorithmic screening methods from third events, which, like Rhino, might observe a system that’s obscured from the buyer.
“If the knowledge in your report is not inaccurate or correct, it is merely hypothetical or aggregated from different individuals’s tenant data, that turns into an advanced query,” stated Hannah Holloway, director of coverage and analysis at Tech Fairness Collaborative. Whereas a credit score report makes use of data particular to a tenant, algorithmic threat scores probably comprise exterior data that tenants can’t individually refute.
The result’s that tenants whose rental historical past and funds are good are left questioning why they’re being charged excessive charges by Rhino. This was the case with Jenessa, a renter in Homestead, Florida who spoke to Motherboard.
She was instructed when she moved into her rental unit 8 months in the past that, because of her credit score, she might both join Rhino or pay 4 months’ hire up entrance for a safety deposit. She pays $1,650 a month for a 2 bed room condominium, so that might have value her $6,600. She selected Rhino and was designated an annual premium of $746.59, in line with an settlement considered by Motherboard. And whereas it could take Jenessa years to pay Rhino an quantity equal to the quoted deposit, in contrast to a deposit, she is going to by no means get cash paid to Rhino again.
Jenessa’s exorbitantly excessive safety deposit—most landlords solely cost one month’s hire—additionally demonstrates how landlords can primarily pressure tenants into utilizing Rhino, even supposing Rhino makes renters signal a doc stating they’re utilizing the service willingly as a substitute for a deposit.
Jenessa makes use of a Part 8 voucher, a federal subsidy for low-income tenants that has been the topic of rampant discrimination from landlords. She thinks for this reason she was requested to pay such a excessive safety deposit, primarily forcing her to make use of Rhino.
In keeping with Rhino’s “Renters Alternative” web site, 17 totally different states have metropolis or state degree assist for the laws. Former Los Angeles Mayor Eric Garcetti and former New York Metropolis mayor Invoice de Blasio are listed as supporters.
“Think about in case you solely paid just a little bit every month for on a regular basis you have been a tenant, so that you by no means needed to shell out an enormous chunk of cash. There is a legislation that might offer you that proper and you can say goodbye to safety deposits,” De Blasio is quoted as saying.
In July, the Biden administration launched government actions focusing on “junk charges,” further bills on high of hire added by property managers and landlords. The administration secured agreements from Residences.com and different itemizing websites to make the charges express. However it’s not clear if this might cowl safety deposit alternate options dealt with by third events.
To Cundiff, Rhino’s priorities are clear. She needs she might simply afford her landlord’s roughly $900 safety deposit in order that her Rhino funds would finish. “I do not like how they’re mainly holding us over a boiling pot,” Cundiff stated. “It is simply ridiculous that I am ending up having to pay a lot simply because we’re poor. To me it seems like they’re attempting to maintain individuals poor.”
Along with banning safety deposits altogether, cities might simply pay them. That’s what Baltimore did shortly after its mayor vetoed the so-called Renter’s Alternative laws, providing to pay deposits for individuals making beneath 80 % of the realm median revenue.
“They by no means consider simply giving poor individuals cash. That’s extra typically the reply to cope with individuals struggling to pay for issues,” Matchette stated.
