The recent bankruptcy filing for JetNetwork has an important lesson for folks putting down deposits on charter cards and fractional cards – do your due diligence.

This story is a little confusing because there are two JetNetworks. One is in chapter 7 bankruptcy and the other new one, with overlapping management and staff from the first, is using the same website and logo as the first.

In the case of the bankrupt JetNetworks, some customers found out too late that their six figure card deposits weren’t held in escrow. And in fact the IRS had taken the money to pay off back taxes that the bankrupt company owed. These same customers are now going through the courts to try and recover their funds.

So while charter cards and fractional jet cards can offer some great benefits for flying privately, you need to do your due diligence before paying your deposit. Either make sure the money is truly put into escrow, and that there are proper procedures in place for drawing it down as you fly. Or make sure the company you are working with is very sound financially.