What the critics of deposit alternatives get right, and where Standby is different

In May 2026 the National Consumer Law Center published a report called Tenant Insecurity, on how security deposit alternatives raise tenants' costs and erode their protections. The New York Times covered it in June. If you run a portfolio and your legal team has read either one, this page is for them. We think most of the criticism is fair, and we built Standby to avoid the practices it describes.

What the report says

The report groups the products into three models: direct billing authorisation, where the company charges the tenant's card or account up to a preset amount when the landlord makes a claim; insurance, where a carrier pays the landlord and then pursues the tenant through subrogation; and surety bonds, where the bond company pays the landlord and collects the full amount from the tenant plus costs. It then lists the problems tenants run into. The main ones:

• The fees are not refundable, and none of them count toward what the tenant ends up owing.
• Some landlords require the product, or require a specific company, so the tenant cannot choose a cash deposit instead.
• Products are marketed as insurance when the tenant is not the one insured.
• Over a long tenancy the fees can cost more than a cash deposit would have.
• Claims are paid without proof, and the tenant has no way to dispute them before the money moves.
• Companies charge accounts automatically, sometimes overdrawing them.
• Prices rise at renewal, and the products are designed to fall outside state security deposit law.

The report's recommendations are addressed to lawmakers, and the first one is that landlords should always be required to accept a traditional security deposit.

Where we agree

A Standby fee is not refundable. A resident who chooses a certificate and leaves the apartment spotless has paid for a service, not made a deposit, and that money does not come back. We say so on the residents page and on the screen where the resident chooses. The report is right that any product which hides this is misleading people.

The report is also right that the longer a resident stays, the better cash looks. Our own comparisons page says the same thing: in a building with very long tenancies and little turnover, the resident's maths on a monthly fee is less obviously a win. Residents who prefer to pay the year up front can, and most get a discount for it.

And the report is right that a product only the landlord can choose is a product the tenant cannot shop for. That is the one we think matters most, and it is where Standby differs structurally.

Cash is always an option

Standby runs two paths through the same link. A resident who qualifies can take a certificate and pay a monthly fee, or pay a cash deposit instead. About one in four residents pays cash. The operator is covered identically either way, which is the reason the choice can sit with the resident rather than the leasing office. A cash deposit paid through Standby is held under the lease and the state's rules on caps, return deadlines and interest, so the resident who wants the protections of state deposit law keeps them.

The report's first recommendation is that landlords be required to accept a traditional deposit. Standby is built that way already.

It is a guarantee, not insurance

We do not call a Standby certificate insurance, because it is not. It is a guarantee to the operator for a fixed amount, usually the full deposit. The resident is not the insured party and we do not say otherwise. There is no carrier, no policy and no exclusions.

That matters at move-out. Under a surety bond or an insurance policy, the company that paid the landlord pursues the tenant for the whole claim and often its costs on top. Under a Standby certificate the resident repays Standby the amount that was drawn, and only that amount. If nothing was owed, nothing is drawn and nothing is repaid. The resident sees every line item.

Draws happen at move-out, and the resident sees the itemisation

The report's sharpest point is that some products pay the landlord on request, with no proof and no dispute route. Standby pays a draw at move-out on the operator's itemisation, in the same way a cash deposit deduction works, and the resident sees the itemised list. A resident who disagrees with a line disputes it with the building, exactly as they would a deduction from a cash deposit. Nobody new enters that conversation, and there is no mid-lease claim against a resident who is still living in the apartment.

We do not adjudicate between the resident and the operator, and we do not claim to. What we do is make the amount, the timing and the itemisation visible to both sides, which is the part the report found missing.

What the fee is, before anyone chooses

A resident sees the exact fee before choosing a certificate. Qualifying is a soft credit check that does not affect their score. The fee is the price of not paying an upfront deposit, and it is shown as a fee, not as a deposit or a premium. Operators set the resident price for their portfolio, and we do not publish resident pricing on this site because it differs by property.

What this means for a legal team

If you are evaluating deposit alternatives for a portfolio, the report is a useful checklist. Ask any provider, including us, whether the resident can always pay cash instead, whether the product is sold as insurance, what the resident owes after a payout, when the money moves and on what evidence, and whether the fee is disclosed before the resident commits. Our answers are on this page. For the models side by side, see the guide to security deposit alternatives.

The report itself is at nclc.org under Tenant Insecurity. We recommend reading it.