Should gun store sales have special credit card tracking? States are divided between mandating it or banning it

Starting Monday, a California law will require credit card networks like Visa and Mastercard to provide banks special retail codes which can be assigned to gun stores to monitor their sales.

But the new laws will do exactly the opposite in Georgia, Iowa, Tennessee and Wyoming, prohibiting the use of specific gun store codes.

The conflicting laws highlight what has quietly emerged as one of the nation’s newest gun policy debates, dividing state capitals along familiar partisan lines.

Some Democratic lawmakers and gun control activists hope the new retail tracking code will help financial institutions flag suspicious gun-related purchases to law enforcement agencies, potentially preventing mass shootings and other crimes. Lawmakers in Colorado and New York followed California’s example.

“The merchant category code is the first step in the banking system that says, ‘Enough! We’re putting our foot down,’” said Hudson Munoz, executive director of the nonprofit advocacy group Guns Down America. “`You cannot use our system to facilitate gun crimes.’”

But many Republican lawmakers and gun rights advocates worry that the retail code could lead to unwarranted suspicion from gun buyers who have done nothing wrong. Over the past 16 months, 17 states with GOP-led legislatures have passed measures banning a firearm storage code or limiting their use.

“We see this as a first step by gun control advocates to restrict the legal trade in firearms,” said Lawrence Keane, senior vice president of the National Shooting Sports Foundation, an industry group that supports laws blocking use of the code. tracking.

The new laws add to the broad national divide over gun policy. Last week, US Surgeon General Vivek Murthy declared gun violence a public health crisisciting a growing number of firearm-related deaths, including more than 48,000 in 2022. The move was quickly criticized by the National Rifle Association.

States have dug opposing trenches on other gun policies. On July 4, for example, Republican-led Louisiana will become the 29th state to allow residents to carry concealed weapons without a permit.

On the other hand, Democrat-led New Mexico this year tightened laws for people who don’t have concealed carry permits, requiring a seven-day waiting period for gun purchases, which is more than double the three-day period for a federal background check.

States have also responded differently to recent mass shootings. In Maine, where an Army reservist killed 18 people and injured 13 others, the Democratic-led Legislature passed a series of new gun restrictions. Following school shootings in Iowa and Tennessee, Republican-led legislatures took steps that could allow more trained teachers bring guns into classrooms.

The wave of legislation targeting firearm store category codes addresses a behind-the-scenes aspect of electronic financial transactions. The Geneva-based International Organization for Standardization establishes thousands of voluntary standards for various domains, including category codes for all types of businesses, from bakeries to boat dealers and bookstores.

These category lists are distributed by credit card networks to banks, which assign specific codes to the companies whose accounts they manage. Some credit card issuers use category codes for customer reward points.

The codes can be used by financial institutions to help identify fraud, money laundering, or unusual purchasing patterns that are reported as suspicious activity to the U.S. Treasury Department’s Financial Crimes Enforcement Network.

Banks and other depository institutions filed more than 1.8 million confidential reports in 2021, flagging more than 5.1 million suspicious activities. About 4% of annual reports lead to law enforcement follow-up and an even smaller percentage to prosecution, according to the Bank Policy Institute, a trade group that represents big banks.

Stores that sell weapons were previously grouped with other retailers into merchant category codes. Some were classified as sporting goods stores, others as miscellaneous and specialty retail stores.

At the request of New York-based Amalgamated Bank, which worked with gun control groups, the International Organization for Standardization adopted a new four-digit category code for gun and ammunition stores in 2022. Major credit card networks credit initially said they would implement it. but retreated under pressure from conservative politicians and the arms industry.

Munoz, who helped lead the effort to establish the firearm storage code, noted that credit cards have been used to buy guns and ammunition for some of the country’s deadliest mass shootings.

The intent of a gun dealer code is to detect suspicious patterns, such as a person with little gun purchasing history who suddenly spends large amounts of money at multiple gun stores in a short period of time. Once alerted by banks, authorities will be able to investigate, potentially preventing a mass shooting, Munoz said.

California’s new law requires credit card networks to make firearms codes available to banks and other financial institutions by Monday. These entities will then have several months to determine which of their business customers should be categorized as gun stores and assign them new codes by May 1.

Visa, the country’s largest payments network, recently updated its commercial data manual to add the firearms code to comply with California law.

Democratic-led legislatures in Colorado and New York also this year approved firearms code mandates aligned to take effect next May in California.

“If there was someone suspiciously purchasing a large number of firearms, at this point it would be very difficult to tell,” said California state Rep. Phil Ting, a Democrat who sponsored the new law. or golf balls or basketballs.”

Even with a firearms store code, it will not be possible to know whether a particular sale is for a rifle, safe or some other product, such as hunting clothing.

State laws banning gun store codes have varying effective dates, but typically allow state attorneys general to seek injunctions against financial institutions that use the codes, with potential fines running into thousands of dollars.

The commercial code could lead more people to buy guns with cash rather than credit in order to protect their privacy, said Dan Eldridge, owner of Maxon Shooter’s Supplies in suburban Chicago. Although his business has not yet been recategorized, Eldridge said he has already installed an ATM in his store.

“Viewed more benignly, this code is an effort to stigmatize gun owners,” Eldridge said. “But a more troubling concern is that this is yet another move by the private sector to get around the ban on the federal government creating a gun registry.”

Iowa Sen. Jason Schultz, a Republican sponsor of legislation banning the firearms code, said he feared that federal agents could gain access to data on financial institutions’ gun store purchases and then use that as justification for breaking into gun owners’ homes and infringing on their rights. Second Amendment Rights.

“States will have to make a choice,” he said, “whether they want to follow California or whether they want to support the original intent of the U.S. Constitution.”