Late Payments and Confusion: One Startup’s Struggle to Make Rent Easier

Like many households over the past year, Jose and his family were being squeezed by rising costs. “Everything is going up,” he said. “The food. The cost of day care.” To free up space in their budget, they turned to a company promoted by their apartment complex: Flex. A booming tech startup based in New York City, Flex says it helps consumers “improve cash flow” by splitting their monthly rent into two manageable installments instead of a single, larger payment.

The process was supposed to be simple. Flex offers to pay its customers’ rent—in full—directly to the landlord. For their part, customers pay their rent to Flex in two installments, one due at the beginning of the month and one later in the month. In essence, Flex promises to front a big chunk of the rent, allowing families to spread out one of their largest expenses.

“I couldn’t even describe it. It was a bad day for us.”

To Jose, this sounded like a good deal. “It was pretty much beyond convenient to split our rent,” he said. “That’s the reason why we used Flex—to make sure we can cover day care and have food in our house.”

But by August, what had started as a lifeline turned into a source of significant financial stress, after Flex issued confusing instructions. At the time, Jose said, his wife was set to receive a direct deposit on the fifth day of the month. The rent was due to their landlord company two days earlier, on the third of the month. But Jose said he was under the impression that Flex would pay the rent so long as funds were available in the family’s account by the fifth.

Jose’s belief was reinforced by a text message from Flex that said, “Please make sure you have funds available for your first payment of $585.25 by the 5th* in order for Flex to help you cover this month’s rent payment.” That message was accompanied by a perplexing caveat: “*disclaimer: if Flex has sent you a specific email stating a different deadline for payment, that email takes precedence.”

It’s unclear if Jose or his wife ever received such an email or why Flex would send that text message to anyone whose payment was actually due before the 5th. Flex’s website at the time left the due date ambiguous, stating that funds to cover the first half customers’ rent “must be available by 1pm EST on the 5th” but that “if you have been notified, you may be required to make the initial payment by the 3rd.”

It soon became apparent that Jose was indeed expected to pay Flex by the 3rd and that, as a result, Flex had not paid his rent. On August 4, Jose and his wife received a letter from their apartment complex informing them that because the rent was past due, they now owed a $50 late fee. The letter threatened the family with eviction if they did not come up with the funds. “If payment is not made as requested, demand is hereby made for you to voluntarily vacate the apartment and return possession to the owner or its agent,” it said.

The late fee was only the beginning of Jose’s troubles. On August 4, a Flex agent told Jose’s wife that because Flex hadn’t detected funds the day before, the family’s account would be deactivated. On August 5, a Flex agent clarified that the text message saying the rent might not be due until the 5th “was sent in error! I do apologize for this,” and that “we needed to detect the funds by the 3rd to cover your August rent.” Jose and his wife would have to scrape together their entire rent, along with the late fee, all at once—rather than the two installments they had budgeted for.

Jose said that although they managed to pay their bill, coming up with the full amount all at once was difficult. “That day was stressful,” he said. “I couldn’t even describe it. It was a bad day for us.”

In emails to Mother Jones, a Flex spokesperson explained that Jose’s problems were related to the fact that his family had been “randomly selected” for a “small test” conducted by the company that month.

“Flex conducted a limited experiment where a small sample of customers were placed on a 3 day (instead of 5 day) first payment window,” the spokesperson explained. “This means they must complete their first payment in the first 3 days of the month for Flex to pay their full rent on time.” She said that Flex “stopped the test after the first month” after realizing it “was not the best customer experience.”

The spokesperson acknowledged that Jose’s family had been “temporarily deactivated” from Flex’s service but added that the family “requested and we approved their immediate reactivation, as we did for all affected customers in this small test.”

“I was raised by old school parents,” Jose told Mother Jones. “They always said, ‘If you have a child, take care of the child. If you live in an apartment, pay your rent.’…When Flex did their thing, I felt kind of embarrassed.”

Jose eventually complained about the company in a series of comments on Flex’s Facebook page. He was not alone. As of last August, Flex had received 52 reviews on Facebook, many of them negative. The company has since disabled customers’ ability to leave reviews on Facebook, and those reviews are no longer visible.

According to the Better Business Bureau, Flex has received more than 500 complaints in the past 12 months, many of which allege that the company took too long to respond to renters’ concerns. Flex acknowledges past customer service problems, telling Mother Jones that the company’s “hyperscaling” due to a pandemic-era “explosion of demand” led to “less than desired response times for our customers.” Last summer, in response to a complaint filed with the New York attorney general’s office, the company explained that one confused renter had been “unable to make contact with us immediately as we were inundated during the first few days of the month.”

Flex’s issues go beyond customer service. Its own website acknowledges that the company is sometimes at fault for failing to pay its customers’ rent on time, mostly because of “technical challenges arising from integrating with dozens of different rent payment systems.” These glitches, the company stated in December, happened “less than 0.4% of the time”—which suggests that as many as 1 in 250 Flex rental payments weren’t making it to landlords by the due date. Flex says it covers customers’ late fees in these cases and that it has since reduced this error rate to just 0.1 percent of payments.

As Flex worked to overcome technological obstacles, it turned to a decidedly low-tech solution—an army of temp workers who, until recently, made many of the rent payments by manually logging into landlords’ payment portals on behalf of Flex customers. That process had a potential flaw: As Flex’s spokesperson acknowledged, it could have been possible for the temps to retain user data on their personal computers. She noted, however, that there is no evidence this ever occurred or was even attempted.

Flex says that beginning in 2022, it spent nearly a year rebuilding its technology. By March 2023, almost all of its rental payments were fully automated and it had stopped employing temps to pay manually—although in “a very small number” of instances, full-time employees still make manual payments. The company says it is working hard to improve customer service. Flex says it plans to once again permit Facebook reviews at some point in the future, and it points to the largely positive ratings for its app in the Apple and Google stores, which it says provide a “far more holistic view of customers’ sentiment” than Better Business Bureau reviews.

“We have made incredible progress in a short period of time as we work to empower as many renters as possible with flexibility over their most significant recurring expense,” Flex’s CEO, Shragie Lichtenstein, said in a statement. “We understand that there is more to be done, and are working hard each day to improve our service and give people more flexibility when it comes to their rent.”

Flex was founded in 2019, but the company truly gained traction after the start of the Covid pandemic in 2020. “We saw an explosion of demand for flexible rent that has still not abated,” the spokesperson said.

With the country in the grip of a severe recession and a federal eviction moratorium on shaky legal footing, millions of consumers turned to “buy now pay later” companies—which the Consumer Finance Protection Bureau has described as “a close substitute for credit cards”—to help cover a wide variety of expenses. The need for such services has grown even more as the economy has entered a period of sustained inflation.

The situation in the rental market is particularly stark. Across the country, rental costs have increased dramatically in recent years; according to Redfin, rents in March were 19.9 percent higher than they were at the start of the pandemic.

“People will forgo medicine, food, and all sorts of things to pay their rent.”

For Flex, the rental industry offers a unique benefit—a huge pool of consumers with a serious incentive to pay their bill on time. “The rent eats first,” said Ariel Nelson, a staff attorney at the National Consumer Law Center. “People will forgo medicine, food, and all sorts of things to pay their rent.”

That’s because the consequences of late or missed rental payments can be catastrophic. They include fees, eviction, and, in Arkansas, even criminal prosecution. According to the Eviction Laws Database, in many states, a tenant only needs to be three days late before a landlord can file an eviction action. While many states regulate the amount that a landlord can charge in late fees, only a few require landlords to wait a specific number of days before charging fees.

Even when consumers prioritize rent, it can be hard to keep up. Rent is typically due around the first of the month, but as the Flex spokesperson explains, “renters—the majority of whom do not have a large amount of excess savings—earn their money throughout the month on unique pay schedules.”

That’s where Flex comes in.

Each month, customers make three separate payments to the company: It collects the first part of the customer’s rent at the beginning of the month; once Flex confirms that those funds are available in the customer’s account, it pays the full rent directly to the landlord. Flex then collects the second part of the rent by the end of the month. It also charges customers a monthly membership fee of up to $14.99 and adds a processing fee to some of the payments.

Flex provided Mother Jones with a list of customers who have had positive experiences with the company. One of them, Janet H., said that Flex had “helped me tremendously.”

“They pay my rent at the first of the month,” she said. “I’ve never been late. I’ve never missed a payment. My credit score has increased.”

Flex estimates that by allowing renters to spread out their payments, it saved customers more than $20 million in late fees last year. But Nelson worries that Flex’s own fees could present difficulties for consumers struggling to afford housing. “They’re charging a monthly subscription fee, but then there are also processing fees,” Nelson said. “So you can see how the fees would add up.”

Flex works with renters whose landlords use rental portals, websites that allow tenants to pay rent online. The company has long described this process as technologically driven. “We automatically make your rent payment directly to your property when it’s due each month,” its website says. Until recently, the site also said that “rent portals are required to use Flex. It’s how our technology works to pay your rent.”

But actually paying rents through those platforms is a surprisingly difficult challenge. “The rent industry is technologically archaic, consisting of a combination of a small number of modern rent platforms and dozens of older payment systems,” said the Flex spokesperson.

“We hired contractors to process these payments manually.”

When possible, Flex says, the company used automated systems to interface with the portals to pay their customers’ rent. But as the company expanded, it found that a “minority” of payments “could not be processed automatically due to integration limitations” associated with older portals.

So beginning in 2020, Flex turned to a staffing agency to bring in a slew of temp workers.

“Rather than abandon these customers, who might otherwise risk late fees or eviction, we hired contractors to process these payments manually until an automated solution could be devised,” the spokesperson explained. (Asked whether Flex’s long-standing claim that “we automatically make your rent payment” was misleading, she said that the word “automatically” referred to “the expected customer action, not the actions of Flex.” She explained that because “Flex now pays the customer’s rent on their behalf, the customer no longer needs to remember to send a check, or click ‘pay’ in their portal, or…anything else.”)

At one point in 2022, the company was working with roughly 88 temporary “data entry specialists”—a role described in one job posting as “a fully remote position with a schedule of up to 8 hours per day” that would last from “August 31st – September 5th.” Temps had the “potential to be invited back for recurring 6 day periods at the beginning of each month thereafter.” The posting noted that temps would “need to use their own desktop or laptop computer for this assignment.”

While these workers performed a variety of tasks, a number were assigned to pay customers’ rents by individually logging into landlords’ rent portals using those customers’ usernames and passwords—credentials that Flex asks some customers to provide.

This process of manually logging in to the rental portals is described in multiple online postings that purport to belong to former Flex temporary workers. In a LinkedIn profile, a former Flex data entry specialist claimed to “meticulously and quickly work through various portals, completing rental payment transactions.” A different former data entry specialist wrote on LinkedIn that as part of his job with Flex, he would “input and verify customer’s sensitive financial information in order to help the company pay their rent.”

Flex says it undertook substantial security precautions to safeguard customers’ passwords and data, employing encryption measures, strictly limiting permission to access confidential material, and logging each instance in which workers accessed customers’ login credentials. Workers signed an agreement “prohibiting the unauthorized use of confidential and nonpublic information,” the spokesperson said. During 2022, the company also “fully rolled out” a requirement that workers’ computers have antivirus and virtual private network software.

Former temp workers told Mother Jones that Flex’s system presented customers’ passwords in such a way that the individual characters were not visible. Then, the temp workers would use the clipboard feature on their computers to paste the password into the rental portal login page. “At no time was the password revealed to the specialist,” the Flex spokesperson said, adding that “the copy function was also fully automated” while “the paste function would be performed manually.”

“We would be operating out of an incognito [browser] window, the idea being that our laptop would not be saving any personal information from the customer, such as passwords or anything like that,” one former worker said.

“Giving a password is a really sensitive thing.”

This worker said that he had not personally made any attempt to save customer passwords or data on his computer. But he also said it might have been possible for less scrupulous workers to attempt to “copy and paste any information [they] want and put it on a separate document.”

Asked about this worker’s statements, the Flex spokesperson said there was no evidence that any of the workers had improperly retained customer data. She also noted that such a scenario “could no longer occur” now that the company had eliminated manual payments made by temps.

“In the past it could have been feasible for an unscrupulous individual to develop some sort of software to breach Flex manual payment policies,” the spokesperson said. “But Flex has no indication this was ever attempted, let alone occurred. Flex logged every interaction with customer data, so if this were to happen Flex could pinpoint the exact culprit.”

While there’s no evidence that customer credentials were misused, two privacy experts told Mother Jones that the mere act of requesting a customer’s password in such a manner could raise significant concerns. Passwords, they noted, can be extremely valuable to bad actors, in part because consumers frequently reuse the same passwords on different sites.

“If someone’s asking you to spell out your password to an account, that would be something I’d consider a security red flag that really shouldn’t be happening,” said Calli Schroeder, a lawyer at the Electronic Privacy Information Center. “And if it is happening, there should be follow up questions.”

Bill Budington, a technologist at the Electronic Frontier Foundation, said that “the casual way in which they’re asking for your password, and that it’s expected that you give that,” was concerning to him. “Giving a password is a really sensitive thing.”

Flex counters that there’s nothing unusual about collecting customers’ passwords for third-party websites. “This is a common practice,” the spokesperson said, “virtually every consumer finance app that asks you to link to third party accounts has a similar interface.”

Flex says it stopped using temps to log in to customer rental portals in March 2023 and that the portion of payments that are fully automatic increased from 78 percent in April 2022 to 95 percent a year later. In the majority of these cases, Flex’s payments to portals are processed through a “direct integration” that does not require it to obtain renters’ login credentials. But other customers—particularly those whose landlords use less sophisticated portals—still “provide portal credentials for Flex’s automated system to complete the payment on their behalf.”

Of the remaining 5 percent, 4.99 percent of payments aren’t processed by Flex, but by the customer themselves. The company has begun to roll out what it calls a “self submit” system, which allows its customers to borrow rent money from Flex, log in to their own rental portal, and pay their landlord directly. The last 0.01 percent of payments, Flex says, are still processed manually—but by a full-time employee rather than a temp worker, and only “upon a customer’s explicit and direct request.”

In its emails to Mother Jones, Flex repeatedly pointed to its progress in addressing past problems. “Just as Flex dedicated almost all of its resources to improving its rent payment platform in 2022, we are similarly dedicating ourselves to improving the customer experience in 2023,” said the spokesperson.

In the past, Flex customers have leveled a wide range of complaints. One wrote to New York’s Department of Financial Services that someone had fraudulently opened a Flex account in their name, resulting in information incorrectly being included in their credit report. In response, Flex told the state that the company had closed the fraudulent account and had requested that the information be removed from the complainant’s credit report. (The Flex spokesperson told Mother Jones that “Flex’s fraud rates are far below industry norms.”)

“We hate putting you on hold.”

Another customer wrote to New York’s attorney general’s office claiming that at the beginning of the month, Flex had charged their account twice—once for half of their rent and a second time for the total amount of the rent—when Flex was only supposed to charge their account once. “This specific complaint related to a one-off technical bug in Flex’s payment system that was Flex’s error,” the Flex spokesperson told Mother Jones. “We patched the bug and gave the customer a full refund.”

When customers do have issues, the main way to contact Flex is through email. The company doesn’t have a direct customer support phone number, according to its website, because “we hate putting you on hold.” Some renters, however, have complained that it is difficult to get help in a timely manner.

One customer, Tiffany, said she began using Flex because she spent approximately $1,900 per month on rent, an amount she struggled to afford. “Right off the bat, I had problems because you can’t get ahold of Flex,” she said. “Everything’s done via email. And they take forever to get back with you. It’s just a pain in the butt.”

On August 1, 2022, Tiffany saw that Flex had withdrawn the first half of her rent but had not yet paid her landlord. She attempted to contact Flex multiple times over the next few days, according to a complaint she filed with the New York AG’s office.

Flex did end up paying Tiffany’s rent on August 3, and she was never charged a late fee. The company said in a letter to the AG that its process had worked as designed and that Tiffany’s complaint stemmed from her own confusion. “This situation arose due to the customer being new to Flex and not understanding the Flex process,” Flex wrote at the time.

Flex told the AG that the company had been “inundated during the first few days of the month” and thus was unable to respond to Tiffany’s query before the 3rd. “​​We have apologized for the delay in response from our team,” the company said.

But there’s another type of complaint that Flex, as a for-profit company, says it simply can’t resolve—no matter how many improvements it makes to its technology. Many customers want “Flex to pay their rent knowing they lack sufficient funds for their first payment,” according to the spokesperson. “A portion of the population that Flex tries to serve struggle to pay their rent on time and also struggle to pay a portion of their rent on time.”

“It’s clearly a difficult problem that hasn’t been solved by anyone else in the rent or tech industries,” she added, “and is probably best solved through public policy and affordable rent.”