This is taken from conversations and experiences with Landlords who have scammed me in the past.
In America, people need to pay a security deposit in order to rent a residential property. Most of the time, this money is sent directly to the landlord for safekeeping. Supposedly, this makes it so the landlord has money for extra repairs if the renter damaged the property. However, this is often abused by the landlords.
First, the money is usually held directly by the landlord. It's not put into a third party escrow account that only pays out when proof of damage is done. Instead, the landlord takes the check, cashes it to “make sure it won't bounce”, then uses the money to cover their bills. That money is usually gone by the time a year or more has passed. So at the end of a year lease when the tenant moves out, the tenant is supposed to get their check back. But the few hundred dollars of money is already spent by the landlord. So they are incentivized to make up BS charges. And they know that the renter usually won't go to court over the security deposit, nor will they contact a government official to look into the landlord. Landlords also generally don't have reviews and can have high turnover.
Let's look at a couple practical examples. Imagine a small property management company that has 1,000 rental properties across America. This company has a policy to pretend to lose the security deposit check when mailing it back to renters after they leave. This makes it so some of the renters just give up on the check. For the persistent renters, the company charges a $30 lost check fee. This $30 fee across 1,000 properties a year is $30,000 in savings for the company. Just a $30 scam alone can be profitable at scale, and no renter is going to sue for $30. And yes, I talked to a CEO of one of these small companies, and this bogus fee was standard procedure.
Another justification landlords use is charging fees for normal wear and tear. Even though this is almost always illegal, landlords justify it because they have to pay to have the unit cleaned between tenants. Instead of taking a hit to their pocket books, they'll use the security deposit to pay for the routine cleaning.
Finally, landlords will use the deposit for repairs that aren't anyone's fault. The water heater breaks? Use the deposit. The furnace blows? Use the deposit. After all, the landlord just blames the tenant cause they “must of done something.”
However the worst is when landlords try to charge extra fees on top of the deposit. They'll threaten legal action, knowing that a tenant can't afford a lawyer. This can be hundreds of extra dollars.