Starting Monday, gun stores in California will be required to have special retail codes assigned to them in order to track their sales. Credit card networks, including Visa and Mastercard, will have to provide these codes to banks as per the new law.
In Georgia, Iowa, Tennessee, and Wyoming, the use of specific gun shop codes is set to be banned by new laws. This measure is expected to have the opposite effect of what is intended.
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The nation’s latest gun policy debate has quietly emerged, causing conflicting laws that are dividing state capitols along familiar partisan lines.
Democratic lawmakers and advocates for gun control are optimistic that the latest retail tracking code will aid financial institutions in identifying dubious gun-related purchases, thereby alerting law enforcement agencies and potentially preventing mass shootings as well as other criminal activities. In the footsteps of California, lawmakers in Colorado and New York have also embraced this measure.
Hudson Munoz, the executive director of Guns Down America, a nonprofit advocacy group, emphasized that the merchant category code serves as a crucial measure in the banking industry. According to Munoz, it is a way for the banking system to take a stand and put an end to the use of their system to facilitate gun crimes. “The merchant category code is like the first line of defense. It signals that the banks are saying, Enough is enough! You can’t use our system to commit gun crimes,” Munoz said.
Republican lawmakers and gun-rights advocates are concerned that the retail code could cause unjustified suspicion towards innocent gun buyers. In fact, 17 states led by GOP legislatures have introduced legislation in the past 16 months to either prohibit or limit the use of a firearms store code.
According to Lawrence Keane, the senior vice president of the National Shooting Sports Foundation, a group that supports laws that prevent the use of tracking codes, the recent move by gun-control supporters to limit the lawful commerce in firearms is just the beginning.
Gun policy remains a contentious issue in the United States, and the recent laws only add to the ongoing divide. In a significant development, U.S. Surgeon General Vivek Murthy recently declared gun violence to be a public health crisis, citing the alarming rise in firearm-related deaths, which exceeded 48,000 in 2022. However, this move has been met with criticism from organizations like the National Rifle Association.
Opposing trench lines have been drawn by various states on different gun policies. Louisiana, led by Republicans, will join the ranks of 28 other states by allowing residents to carry concealed guns without a permit starting from July 4th.
In contrast, New Mexico, which is led by the Democrats, has recently made its laws stricter for people who do not possess concealed-carry permits. The state now mandates a seven-day waiting period for purchasing guns, exceeding the federal background check’s three-day period.
Recent mass shootings have resulted in different responses from various states. In Maine, where an Army reservist killed 18 people and injured 13 others, the Democratic-led Legislature passed new gun restrictions. On the other hand, following school shootings in Iowa and Tennessee, the Republican-led legislatures in those states took measures to allow more trained teachers to bring firearms into classrooms.
Legislation aimed at firearm store category codes has recently surged, shedding light on the often-overlooked role of electronic financial transactions. The International Organization for Standardization, headquartered in Geneva, establishes numerous voluntary standards for different industries, which includes category codes for a wide range of businesses, ranging from bookstores to bakeries to boat dealerships.
Credit card networks provide category lists to banks, who then assign codes to businesses they handle. These category codes are sometimes used by credit card issuers for customer reward points.
Financial institutions utilize codes to aid in detecting fraudulent activities, money laundering, and peculiar purchasing patterns that are reported as suspicious activities to the U.S. Treasury Department’s Financial Crimes Enforcement Network.
In 2022, over 1.8 million confidential reports were filed by banks and other depository institutions, indicating more than 5.1 million suspicious activities. However, only 4% of these annual reports resulted in follow-up by law enforcement, and an even smaller percentage led to prosecution, according to the Bank Policy Institute, which is a trade group that represents large banks.
In the past, gun-selling stores were categorized along with other retailers in merchant category codes. They were sometimes designated as sporting goods stores, while others were labeled as miscellaneous or specialty retail shops.
In 2022, a new four-digit category code for gun and ammunition shops was adopted by the International Organization for Standardization, thanks to the efforts of gun-control groups and Amalgamated Bank, based in New York. Initially, major credit card networks had agreed to implement it, but they later faced pressure from conservative politicians and the gun industry and backed off from their commitment.
According to Munoz, credit cards were utilized to purchase firearms and ammunition for some of the most catastrophic mass shootings in the United States. He played a crucial role in the creation of the firearms store code.
According to Munoz, the primary goal of implementing a gun merchant code is to identify any suspicious activities that may raise red flags. For instance, if an individual with no prior history of purchasing firearms suddenly starts buying an excessive amount of guns from various stores in a short period, the code would immediately alert the authorities. This could help in detecting and preventing potential mass shootings in the future. The code would work in collaboration with banks to ensure that any unusual transaction is reported and investigated promptly.
By Monday, banks and financial institutions in California are required to have access to the firearms code, as per the new law. They will then have a few months to classify their business clients as gun stores and assign them new codes by May 1st.
In order to comply with California’s law, Visa, which is the largest payment network in the United States, has made an update to its merchant data manual by adding the firearms code.
In addition to California, Democratic-led legislatures in Colorado and New York have also passed mandates for firearms code that will take effect next May.
According to California State Assemblymember Phil Ting, who sponsored the new law, identifying someone who is making a suspiciously large purchase of firearms would be incredibly challenging at present. He stated that it would be impossible to differentiate between firearms and other types of balls, such as soccer balls, golf balls, or basketballs.
It’s important to note that even if a firearms store code is used, it won’t provide any specific details about the type of product being sold. For instance, it won’t differentiate between a rifle, a storage safe, or hunting apparel.
State laws that prohibit gun store codes have different effective dates, but they generally empower state attorneys general to seek court injunctions against financial institutions that use these codes. Such institutions could face hefty fines reaching thousands of dollars.
According to Dan Eldridge, the owner of Maxon Shooter’s Supplies in suburban Chicago, the new merchant code may encourage individuals to purchase guns with cash instead of credit to safeguard their privacy. Although Eldridge’s establishment has not yet been reclassified, he has already installed an ATM in his store.
Eldridge expressed his views on the code, stating that it could be seen as an attempt to label gun owners in a negative light. However, he also expressed a more concerning issue with the code, which is the potential for it to be used as a way for the private sector to create a gun registry, despite the federal government being prohibited from doing so.
Iowa State Senator Jason Schultz, a Republican who sponsored the bill that would prohibit the firearms code, expressed his concern about federal agents potentially obtaining information regarding gun store purchases from financial institutions. He fears that this information could be used as a basis for conducting raids on the homes of gun owners, which would be an infringement on their Second Amendment rights.
According to him, the states will have to decide whether they want to align with California or uphold the initial purpose of the U.S. Constitution.
