Lawmakers Urge Credit Card Companies to Flag Gun Sales

September 9, 2022

guns an ammunition Photo by Jay Rembert on Unsplash

Recognizing that some of the most notorious mass shooters funded their massacres with credit cards, lawmakers are turning to credit card companies to reclassify the merchant codes for gun sales and ammunition purchases as something other than “sporting goods” or “retail.”

Lawmakers, Others Want a Stand-out Merchant Code for Gun Sales

On September 1, Senators Elizabeth Warren (D-MA) and Dianne Feinstein (D-CA), along with six other members of Congress, wrote to the major credit card companies, urging them to create a new merchant code for guns and ammunition that would “make it easier for financial institutions to monitor certain types of suspicious activities including straw purchases and unlawful bulk purchases that could be used in the commission of domestic terrorist acts or gun trafficking schemes.”

“When lawmakers are looking for some sort of workaround through, let’s say, banks and credit cards, it’s because the normal way of doing things does not exist with guns,” Jim Kessler, Executive Vice President for Policy at Third Way, a think tank that champions center-left ideas, tells Political IQ.

He adds, “Every gun manufacturer knows when a gun of theirs is used in a crime.”

Police do thousands of gun traces per year: the make, the model, from what store the gun was originally sold. “That’s how the trace begins,” says Kessler. “But [the manufacturers] are the only ones that know it. None of that information is really allowed to be recorded and tabulated. No other industry has that kind of protection.”

So, lawmakers, he says, are “looking for some other way to get that kind of accountability,” and a firearm merchant code “is a clever way of doing it.”

The lawmakers are not alone in their effort. The Attorneys General from California and New York State have initiated their own push.

Further, New York City’s Mayor and its Comptroller have joined with the trustees of New York City’s Employee Retirement System, its Teacher’s Retirement System, Board of Education Retirement System and the California State Teachers’ Retirement System, all pressing for the firearm-specific merchant code.

The retirees are quick to emphasize that they own billions of dollars in combined stockholder shares of Visa, Mastercard and American Express.

Credit Card Companies May Be Evolving on Issue

Credit card companies have long pushed back, saying it’s not their responsibility to create systems to track gun purchases.

“We do not believe Visa should be in the position of setting restrictions on the sale of lawful goods or services,” a company spokeswoman said in 2018, while a Mastercard spokesman emphasized cardholders’ “privacy of their own purchasing decisions.”

Kessler sees a couple of factors at play here. One, the card companies may be concerned about a slippery slope, such as, if items like guns are flagged, would that lead to other private purchases, like abortions, getting their own code?

But more than that, he says, the gun industry has a history of “punishing responsible merchants.”

He points to the 1990s, when the biggest gun manufacturer at the time, Smith & Wesson, struck a deal with the Clinton Administration on how it sold and marketed their firearms.  “It ran afoul of the NRA, and they’re a minor player now,” says Kessler.

But the card companies’ policies may be changing. In late August, Seth Eisen, Mastercard’s Senior Vice President for Communications, said the issue is currently being considered by the International Standards Organization, which sets merchant coding standards.

“As we do with other [merchant category code] proposals and related topics, we are reviewing how it could be implemented and managed by the banks that connect merchants to our network,” Eisen said in an email to Payments Dive, a trade industry journal. “This will help us continue to deliver a payments system that supports all legal purchases while protecting the privacy and decisions of individual cardholders.”

Visa and American Express have so far not answered Payments Dive’s requests for comment.

Notorious Mass Shooters Financed Massacres with Credit Cards

The murderer of 12 people at an Aurora, Colorado, movie theater in 2012 charged $9,000 worth of guns, ammunition and tactical gear in the two months leading up to his attack. The murderer of 49 people at the Pulse night club in Orlando in 2016 charged more than $26,000 on cards. And the murderer of 59 people at a Las Vegas music festival in 2017 charged close to $95,000 on cards.

Kessler adds that militia groups’ firearms purchases would “dwarf” those numbers.

“This is our responsibility. We have an obligation to address crime facilitated through our system,” Priscilla Sims Brown, CEO of Amalgamated Bank, which is teaming with lawmakers to push for the merchant code, said in June.

Law enforcement has echoed her sentiment. “Banks will complain this is the government’s job and it’s not our job, but you know what? They are the only ones with the ability to do this,” Kevin Sullivan, a former New York Police investigator, said in 2018.

Gun Proponents Voice Privacy Fears

David Codrea, a gun owner rights advocate, echoes Mastercard’s 2018 concerns about privacy. He wrote in an August op-ed for Firearms News, “So much for your right to privacy. And so much for creating records through Merchant Category Codes that do an end run around statutory prohibitions on creating a gun owner database.”

“We have zillions of national databases,” Kessler counters, adding that there are already some gun ownership databases on the state level. “In some states, you have to register to own a firearm. Like New York, Massachusetts, with that registry you have a database. So I just think that’s a red herring.”

Would Cash or Paypal Create a Workaround?

Kessler could see the firearm merchant code leading to online and private sellers, the bulk of whom right now are not considered by law “gun dealers” and therefore don’t have to do background checks, being redefined.

“I would argue that if you’re accepting credit card payments from somebody, you are in a business,” he says. “Once you’re in a business that just puts you in a whole different regulatory scheme.”

Of course, there would be an easy solution to this for gun sellers: don’t use credit cards. “There’s going to be PayPal, Venmo, and that sort of thing. There’s ways around that private sale,” Kessler concedes.

There’s also going to be cash. But he adds, “When you’re selling a gun, it takes two to make that transaction. And the question is, especially when it’s private transactions, do two people want to hide it? If only one person wants to hide the transaction the other one might think, ‘I’m not really comfortable with this.'”

Poll: Americans Still Want Stricter Gun Laws

In June, President Biden signed the first federal gun control legislation in 30 years. The bipartisan bill included tougher background checks for buyers younger than 21, funding for mental health programs, funding to implement “red flag” laws to remove firearms from people considered a safety risk, and closing the “boyfriend loophole” to take weapons away from those convicted of domestic abuse.

A University of Chicago/AP-NORC poll from late July/early August found that roughly one in five Americans have experienced gun violence in the past five years, such as being threatened with a gun or a shooting victim, or knew a close friend or family member who was.

The poll further found that 71% of those surveyed—including half of all Republicans and the vast majority of Democrats—believe gun laws should be stricter. And 85% of those surveyed wanted federal background checks on all firearm purchases.

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