Should gun store sales get special credit card tracking? States are split

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

But new laws will do the exact opposite in Georgia, Iowa, Tennessee and Wyoming by banning the use of specific gun shop codes.

The conflicting bills highlight what has quietly emerged as one of the latest debates over the nation’s gun policy, with state capitals divided 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, potentially preventing mass shootings and other crimes. Lawmakers in Colorado and New York have followed California’s lead.

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

But many Republican lawmakers and gun rights advocates fear the store code could lead to unwarranted suspicion of gun buyers who have done nothing wrong. In the past 16 months, 17 states with GOP-led legislatures have passed measures banning a gun store code or restricting its use.

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

The new laws deepen the national divide over gun policy. Last week, U.S. Surgeon General Vivek Murthy said gun violence is a public health crisisciting a rising number of firearm-related deaths, including more than 48,000 by 2022. The measure was quickly criticized by the National Rifle Association.

States have dug opposing trenches for 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.

In contrast, Democratic-led New Mexico this year tightened laws for people who don’t have a permit to carry a gun. a waiting period of seven days 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 was 18 people killed and injured 13 others, the Democratic-led Legislature passed a variety of new gun restrictions. After school shootings in Iowa and Tennessee, Republican-led legislatures there passed measures that would allow more trained teachers bringing weapons into classrooms.

The wave of legislation targeting category codes for firearms stores is taking aim at a behind-the-scenes aspect of electronic financial transactions. The Geneva-based International Organization for Standardization sets thousands of voluntary standards for a variety of areas, including category codes for everything from bakeries to boat dealers to bookstores.

These category lists are distributed by credit card networks to banks, which assign specific codes to companies whose accounts they manage. Some credit card issuers use the category codes for customer rewards 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 depositories filed more than 1.8 million confidential reports in 2022, noting more than 5.1 million suspicious activities. About 4% of annual reports result in law enforcement follow-up, and an even smaller percentage result in prosecution, according to the Bank Policy Institute, a trade group representing large banks.

Stores that sell guns were previously grouped with other retailers into seller category codes. Some are classified as sporting goods stores, others as sundries and specialty stores.

At the urging 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 initially said they would implement them. but withdrew under pressure from conservative politicians and the arms industry.

Munoz, who helped draft the code for gun stores, noted that credit cards were used to buy guns and ammunition for some of the deadliest mass shootings in the country’s history.

The purpose of a gun dealer code is to spot suspicious patterns, such as a person with little history of gun purchases who suddenly spends large amounts of money at multiple gun stores in a short period of time. Once the banks alert them, authorities can investigate, potentially preventing a mass shooting, Munoz said.

California’s new law requires credit card networks to make the firearms code available to banks and other financial institutions by Monday. Those entities then have several months to determine which of their business customers should be classified as gun shops and issue them new codes by May 1.

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

Democratic-led legislatures in Colorado and New York also passed gun laws this year that will take effect in California next May.

“If someone were to suspiciously buy a large number of firearms, it would be very hard to tell now,” said California State Assemblymember Phil Ting, a Democrat who sponsored the new law. “You couldn’t tell if they were footballs, golf balls or basketballs.”

Even with a gun store code, there’s no way to know whether a particular offer is for a gun, a safe, or another product, such as hunting gear.

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

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

“Viewed in the most sympathetic way, this code is an attempt to stigmatize gun owners,” Eldridge said. “But a more concerning concern is that this is yet another end to the private sector sidestepping the ban on the federal government establishing a gun registry.”

Iowa Sen. Jason Schultz, a Republican sponsor of legislation banning the gun law, said he feared federal agents could gain access to records of gun store purchases from financial institutions and then use that as justification to raid gun owners’ homes and trespass on their 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 United States Constitution.”