December 1, 2024
Worried about losing your Jet Card and Private Jet Membership deposits? These Jet Card providers offer an escrow account option.
With the financial stability of jet cards and private jet membership providers again in the spotlight, the question of what happens to the money you ‘deposit’ is again a hot topic. The good news, is ome providers do give you added protection.
So, you found a jet card provider that fits your needs.
That’s the good news.
More good news is despite the discussions of Wheels Up’s finances, failures in the jet card and membership segment are not an everyday occurrence.
The last major failure that cost jet card customers money was JetSuite in 2020.
There have been others.
However, they were smaller companies and were mainly surrounded by accusations of fraud.
Of course, if you lose your money, fraud, bad management, or business circumstances don’t matter.
One way – untested – that should protect your funds is an escrow account.
I say untested because, as far as I know, there hasn’t been a failure of a jet card or membership provider with an escrow account.
The idea of an escrow account is that your funds are kept in a separate account and cannot be transferred into the provider’s operator account without your approval.
Investopedia writes, “Escrow can be used for various transactions, including real estate, stock issuances, and online sales. Money from the buyer is held in an escrow account until the transaction is complete or the buyer is able to receive or verify the condition of the product. Once the buyer approves the transaction, the money is released to the seller from the escrow account. The company managing the escrow account generally takes a fee for performing the third-party service.”
Some providers say they put your funds into segregated accounts.
Segregated accounts are separate from a provider’s operating accounts.
However, they do not necessarily require your approval to transfer funds.
If you want the protection of an escrow account, some companies provide it as an option, although it is generally not a matter of course.
Now that you have the above list, it’s essential to know that, for the most part, it is on request.
Further, some providers will only do it in certain circumstances. In other words, it is something you need to negotiate.
More information is in Column BC and Hidden Column BD on the Jet Card Comparisons spreadsheet.
There can also be extra fees.
And having an escrow account means you have an extra step that could mean you need more time and won’t be able to make last-minute reservations.
Finally, if funds can be transferred out of the escrow account without your signature and/or notification, there is still a gap in protection.
You also hear about providers offering refundable deposits.
While that is a good thing if you find the services being offered don’t fit your needs, it probably won’t help if the company fails suddenly.
In other words, with most companies being private, there isn’t a window into their finances.
By the time you know there’s a problem, it will be too late to request a refund.
The Ascension Air failure shows fraud can be hard to avoid.
The principal of the defunct fractional operator apparently transferred aircraft ownership data registered with the FAA from shareowners of airplanes to himself, which he then used as collateral to secure loans.
On the other side, several subscribers who lost money with JetSuite told me to rationalize their losses; they divided them into their overall spending and concluded they had paid a higher hourly rate than they previously thought.
Hopefully, nobody is using their kids’ college funds to fly privately.
Read: What happens to your jet card and private jet membership deposits?
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