While the Biden administration is all hands on helping Ukrainians fight for their freedom, ours is getting challenged here at home.
Credit card companies like Visa, Mastercard, and American Express have moved to add a new subsection of the merchant code for retailers who are selling guns. Merchant-category codes (MCCs) are used to tag and identify the types of merchants using their platforms and the goods and services they sell. The three companies announced that gun retailers will be moved out of the “specialty retailers” or “durable goods sellers” categories and have their own section. These card networks said they would work with the authorities and abide by the guidelines for consumer privacy as they start rolling out these new codes.
One of the biggest supporters of this move, and a contributor to the Democratic letter from congress asking for a more stringent process on gun buying, Sen. Elizabeth Warren, said the code will be “an important step towards ending financial system support for gun trafficking, gun violence and domestic terrorism.”
Attorneys general of New York and California supported the motion and asked card networks to begin tracking gun sales and flagging suspicious activities, and forwarding them to law enforcement. The attorneys general cited the networks’ availability when reporting fraudulent activities that could be tied to money laundering and other kinds of criminal activity, so tracking gun sales should not be that hard.
Not a Unanimous Vote
However, independence advocates argue that this “flagging” is just another way to crack down on gun ownership, just like in the letter penned by other Attorneys General like Tennessee Attorney General Jonathan Skrmetti and Montana Attorney General Austin Knudsen who wrote that this could unfairly dismiss law-abiding citizens who follow gun regulations to a tee.
“Categorizing the constitutionally protected right to purchase firearms unfairly singles out law-abiding merchants and consumers alike.”
24 state attorneys general sent a letter to credit card companies today about the new gun Merchant Category Code, saying it "will chill the exercise of a constitutional right without any concomitant benefit." https://t.co/7TABAFvtGa pic.twitter.com/lopd5Gx8gC
— Firearms Policy Coalition (@gunpolicy) September 20, 2022
“Be advised that we will marshal the full scope of our lawful authority to protect our citizens and consumers from unlawful attempts to undermine their constitutional rights,” the letter notes.
They also argued that this new code would not protect public safety. Instead, tracking this further information can result in misuse of data “either unintentional or deliberate.”
“Creating and tracking this data only matters if your institutions are considering using that information to take further, harmful action—like infringing upon consumer privacy, inhibiting constitutionally protected purchases by selectively restricting the use of your payment systems, or otherwise withholding your financial services from targeted ‘disfavored’ merchants.”
The letter added that this could also discriminate against gun sellers throughout the country.
GOP Senators, including Sent. Thom Tillis, Cynthia Lummis, and Marco Rubio have also penned a united letter calling out the card networks for this decision. Their letter noted that this decision, though “hailed by radical anti-gun activists,” is counterintuitive to more productive ways of improving the country’s gun control policies while protecting the Second Amendment Rights of its citizens.
“By bowing to international and activist pressure, you are creating the framework that will allow either yourselves, or the banks that you serve, to unilaterally decline the process of legal gun sales.”
“Due to the nature of the information collected from merchants when processing a transaction, you will have no ability to know what is being purchased.” Because of this, the GOP senators noted there is no use for adding this sub-category. A person could be buying a gun holster and be indiscriminately tagged. Or a screw, and they wouldn’t know they’re already flagged in a gun-buyers list that could become misconstrued information.
However, democrats also noted the actionable next steps like:
- Card networks like Mastercard and Visa need to not only adopt the code, but also enforce its use by merchants and payment processors.
- Merchants must start using the code, and not obfuscate transactions by using other classifications.
- – Big retailers like Walmart and sporting goods stores — which themselves use different merchant codes — need to use the code at registers they use to ring up firearms.
- Most crucially, the payments industry needs to develop and refine software algorithms for identifying suspicious activity based on the merchant codes. (Amalgamated has begun work on this.) Banks could then either allow those transactions, or block them and file suspicious activity reports with the Treasury Department’s Financial Crimes Enforcement Network, which would ideally also create a system to quickly forward that information to local law enforcement and the F.B.I.
However, the GOP is not convinced it will be a step forward for America.
“Social policy should be debated and determined within our political institutions. Americans are tired of seeing corporate leverage used to advance political goals that cannot muster basic democratic support,” the letter notes.
To add, the senators are asking the card networks for more transparency by answering the questions below:
- What is your understanding of the ISO process and timing of this announcement?
- What input did you give to the ISO as part of this process
- Did you coordinate with any outside entities – politicians, activist organizations, or others – on coming to the decision to comply with the new ISO standard?
- What financial support, if any, do your companies give to the ISO? Will you be withdrawing this financial support if they continue to act in a political way?
- As is being reported in the media, how will this information in any way be useful in preventing suspicious gun sales?
- Please explain in detail all the ways that this change will impact retailers and their customers.
- What will you do to ensure that the financial privacy of law abiding customers is protected, and those customers will not be harassed by anti-gun groups or overzealous government regulators?
- Will you commit to never impeding a legal transaction based on public sentiment or political pressure?
- Will you defend the rights of law-abiding Americans to utilize your company’s services, free from discrimination by any employee or subsidiary abusing this new merchant code?