With the average deposit a tenant has to hand over costing £992, Shelter is urging people to check that their landlord has met requirements to place their deposit in a Government-backed scheme within 30 days of receiving it.
Some 30% of 4,000 private tenants surveyed in England were in the dark about their landlords' obligations to protect their deposits, Shelter found.
As well as protecting the deposit from being unfairly withheld, tenancy deposit protection schemes act as independent mediators, helping both landlords and tenants, if tenants believe unfair deductions have been made when a tenancy ends.
Campbell Robb, chief executive of Shelter, said: "We campaigned for this change in the law to stop renters from losing money in unfair deposit deductions, so it's extremely worrying that so many are still unaware of their tenancy deposit rights.
"We know that most landlords do the right thing but unfortunately some are still unaware of their responsibilities to protect the deposits that are given to them in good faith. At Shelter we hear from thousands of renters who have huge chunks deducted from their deposit for no good reason, or who have to wait months to get their money back."
Landlords who fail to place their tenants' deposit in an authorised scheme within 30 days of receiving it or can be taken to court. They could face a penalty of one to three times the value of the deposit, which is then awarded to the tenant.
Housing Minister Mark Prisk said: "Tenancy deposit schemes offer vital protection for both tenants and landlords, giving them financial peace of mind and offering neutral help to resolve disputes.
"In March alone, 2.6 million deposits were protected by Government-backed schemes, and over the last six years, more than seven million deposits have been protected. But there's always more to do to ensure that people know, and exercise their rights, and I hope that with Shelter's help, even more tenants will know how to ensure their hard-earned cash is safe."
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