Quick answer: Can a business keep your deposit?

Sometimes. "Nonrefundable" does not settle every deposit dispute. For U.S. consumers, the result usually turns on four things: what the payment was for, the terms shown before payment, applicable state law, and what happened after the transaction.

A booking deposit is not analyzed the same way as a residential security deposit or real estate earnest money. Your position may be stronger if the business canceled, failed to provide the promised service, changed the terms, or retained money despite an exception or contract contingency.

There is no single nationwide rule for every type of deposit. First identify the payment, then find the rule or contract term that applies.

What kind of deposit did you pay?

A receipt may call the payment a "deposit," "retainer," "cancellation fee," or "prepayment." That label is evidence, but it may not determine the legal treatment. The payment's purpose and the full agreement matter.

What a nonrefundable policy does and does not do

A business has a stronger argument for retaining a payment when the policy:

• was shown clearly before payment;
• states the amount or how it will be calculated;
• explains when the business may retain the money;
• identifies any exceptions; and
• matches the transaction you made.

That still may not end the analysis. Depending on the state and the type of transaction, a cancellation charge may be challenged as an unreasonable penalty rather than a valid estimate of the business's expected loss. Calling a charge "liquidated damages" does not automatically decide that issue.

Special rules can also apply to particular payments. For a residential security deposit, don't assume that adding "nonrefundable" to a lease lets a landlord keep the money for any reason. The lease and state landlord-tenant law usually control permitted deductions, deadlines, and documentation.

The reason for cancellation matters. A customer who changes their mind may face a disclosed late-cancellation charge. A customer whose provider canceled the service should look for the provider-cancellation section instead of assuming that a customer-facing "no refunds" term answers the question.

Examples of rules that vary

Rental security deposits: California example

California shows why a rental deposit needs a separate analysis. The California Courts guide to security deposits says that, after a tenant moves out, a landlord generally has 21 days to return the deposit minus lawful deductions and provide an itemized statement.

The guide lists examples of potentially allowed deductions, including repairing tenant-caused damage beyond normal wear and tear and cleaning the unit only to the condition it had at move-in. If repair documentation isn't available within the initial period, California rules can require later follow-up; the guidance says receipts are due within 14 days after the repairs are completed.

That's a California example, not a rule for every state. If a landlord keeps your deposit, compare each deduction with your state's allowed uses, deadline, and documentation requirements.

Earnest money in a home purchase

Earnest money is controlled by the purchase contract, not by a generic "nonrefundable deposit" rule. It is commonly held in escrow until closing or until the parties resolve a dispute.

If the agreement includes an inspection contingency and you cancel within the required period and follow the notice procedure, the money may be refundable. If the contingency expired, or you cancel for a reason the contract does not cover, the seller may argue that forfeiture is allowed. Nolo's explanation of inspection contingencies and earnest money provides a general overview.

The amount of earnest money does not by itself answer whether you can recover it. Check the contingency language, expiration date, notice method, and instructions for releasing disputed funds.

Airbnb and other marketplace bookings

A platform's policy may be the first place to look, but it is not automatically the same as state law. Airbnb's cancellation policy help page distinguishes standard reservations of up to 27 consecutive nights from long-term reservations of 28 nights or more. Airbnb also says that all standard cancellation policies include a 24-hour cancellation period, that its discounted nonrefundable option is not subject to the standard policy, and that certain situations can override a selected policy.

Check the cancellation terms attached to your reservation, whether you selected the discounted nonrefundable option, and the date and time of cancellation. Keep messages inside the platform when possible, and confirm whether the platform or the host charged your payment method.

Cruises and other travel services

Travel providers use different cancellation tables for different products. Royal Caribbean's refund policy, for example, separates cruises by length. It says that if the company cancels a voyage or delays embarkation by three days or more, a guest who elects not to sail on the delayed or substitute voyage can obtain a refund or future cruise credit, subject to the policy's terms.

The policy also says refund requests must be made within six months of the cancellation date or scheduled embarkation date, whichever is earlier. Other terms can vary by booking, including whether a chartered sailing was sold by a third-party reseller. Read the policy attached to your reservation rather than relying on a general statement that all travel deposits are nonrefundable.

How to challenge a retained deposit

1. Save the evidence

Collect the documents before a web page or app changes:

• receipt, invoice, confirmation email, and payment record;
• the cancellation policy and terms shown at checkout;
• screenshots of the advertisement or booking page;
• the date and time you paid and canceled;
• messages with the business, host, landlord, agent, or platform;
• proof that the provider canceled, failed to deliver, or changed the service;
• photos, inspection reports, and move-in or move-out records for a rental;
• the purchase agreement, contingency notice, and escrow information for earnest money.

Then write a short timeline. Include what you paid, what was promised, when the cancellation or nonperformance occurred, and what the business said about keeping the money.

2. Match the facts to the controlling term

Find the exact section covering:

• customer cancellation;
• provider cancellation;
• no-shows or late cancellations;
• refunds, credits, and rescheduling;
• security-deposit deductions;
• earnest-money contingencies; and
• dispute or arbitration procedures.

Check whether that term was presented before payment and whether it applies to your product and dates. If the receipt, checkout page, and contract use different language, save every version and identify the inconsistency.

3. Ask for a written explanation

A specific written request gives the business a chance to correct an error and creates a record for any later dispute.

Subject: Request for deposit review and itemized explanation

Hello [name],

I paid $[amount] on [date] for [service, reservation, lease, or purchase]. I canceled on [date] / you notified me that the service was canceled on [date].

Please identify the contract term that authorizes retaining the money and confirm whether you are treating it as a booking deposit, cancellation charge, security deposit, or earnest money. If it is a security deposit, please send the itemized deductions and supporting documents required under applicable law.

Based on [the cancellation window, an active contingency, provider cancellation, or other fact], I request a refund of $[amount] to the original payment method. If you deny the request, please explain the decision in writing.

Thank you,
[name]

Stay factual. Don't threaten, insult the business, or describe an authorized payment as fraudulent.

4. Escalate through the correct channel

Use the route that fits the transaction:

1. Marketplace or travel booking: Open a case through the platform's or provider's official resolution process. Attach the reservation policy, payment record, and timeline.
2. Rental: Request the itemized accounting required by your state's landlord-tenant rules. A local tenant-support organization or state consumer-protection office may help explain the next step.
3. Real estate: Notify the escrow holder and review the contract's dispute procedure. Don't assume the escrow company can decide who is legally entitled to the money.
4. Credit card, debit card, or bank payment: Ask the issuer or bank whether its dispute process applies and what deadline governs it. Describe the transaction accurately. A payment dispute is not an automatic refund just because you disagree with a cancellation policy.
5. State complaint or court: Depending on the industry and amount, a state attorney general, licensing agency, small claims court, or local regulator may be appropriate. A regulator complaint may document a pattern, but it may not produce an individual refund.

Before accepting a credit or partial payment, ask whether doing so requires you to release any remaining claim. Get the answer in writing.

What federal enforcement does and does not mean

Federal agencies can challenge deceptive fees or unfair business practices, but an enforcement action against one company does not create a universal refund rule.

The FTC's action against Invitation Homes alleged that the landlord charged renters substantial junk fees and mishandled security deposits. The complaint also alleged that Invitation Homes charged consumers tens of millions of dollars in junk fees between 2021 and June 2023. Those allegations show why rental-fee disclosures and deposit records can draw regulatory scrutiny. They do not establish that every landlord must refund every deposit or decide your individual dispute.

Common mistakes to avoid

• Treating a rental security deposit like a service-booking fee.
• Assuming that "nonrefundable" ends the inquiry without reading the full agreement.
• Relying on a supposed nationwide percentage rule for earnest money or another deposit.
• Ignoring a contingency, cancellation window, or provider-cancellation clause.
• Waiting until important screenshots or messages disappear.
• Filing a payment dispute without checking which payment method and deadline apply.
• Accepting a future credit without checking whether it waives your refund request.
• Citing another state's law as if it applied where you live.

If the deposit is large, tied to a home purchase or lease, or subject to arbitration, consider getting advice from a licensed attorney or an appropriate legal-aid or tenant-support organization in your state.

Bottom line

A business may keep a deposit when an applicable term and local law allow it, but "nonrefundable" is not a universal answer. Classify the payment, compare the exact terms with the reason and timing of cancellation, and preserve the evidence. Your first written request should include the receipt, the term shown before payment, a short timeline, and a request for the exact clause or itemized accounting that supports keeping the money.