Security deposits should be held by the municipality. Should the landlord wish to claim it, they can prove their case in court.
Fuck the status quo forever. Unforgivable.
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This is an area of law governed at the state level. Some states are much better than others. Personally, I have not lived in a state that has a 3rd party hold the money (and I'm not sure if any do that). I did rent in a state where any charges that the landlord claims that they shouldn't is met with triple damages. So if they keep $200 instead of the $100 of actual cost to repair something you broke, they owe you $300. It really incentivizes landlords to only charge accurately (e.g., not for standard wear and tear), and generally deposits were much lower there than in other states I've rented.
Lots of states also charge interest on any deposit money not immediately given back to the renter.