QB Issue Resolution:

Create a liability account called customer deposits, then create a service item named cust-dep that has that account selected on the item screen.

use a sales receipt to record receiving the deposit, use the cust-dep service item on the sales receipt. All customer deposits can use that one account since QB will record them by customer

when you pay it back, write the check and use the customer deposit account on the check, or if the deposit is to be applied to an invoice, use the cust-dep service item as the last item on the invoice and enter the amount of the deposit as a negative

Resolution for Issue 'How do I record a Security Deposit for a Customer? And then, how do I refund the Security Deposit to the customer?' available: Yes (Solved).
Source: Intuit Community forum.

How do I record a Security Deposit for a Customer? And then, how do I refund the Security Deposit to the customer?: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

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