HomeTop StoriesAnalysis - US Republicans are trying to thwart state-level gun sales codes

Analysis – US Republicans are trying to thwart state-level gun sales codes

By Ross Kerber

(Reuters) – Legislation being pursued by Republicans in several US states aims to restrict the use of a planned trade code for credit card transactions at gun stores, designed to detect suspicious firearm and ammunition sales, making a tool welcomed by gun control advocates is undermined.

The bills were introduced in states such as Texas, Florida, Mississippi, Oklahoma, West Virginia and Wyoming.

They would ban or restrict banks or payment processors from using the “merchant category code,” or MCC, approved for arms sellers in September by the Geneva-based nongovernmental International Organization for Standardization (ISO), which develops standards for various aspects of technology and manufacturing .

The major credit and debit card companies have committed to using the code. Discover Financial Services has said it will launch it in April, following other companies. Discover is the first company to publish a timetable.

The code was requested from the ISO by Amalgamated Bank of New York, which calls itself a socially responsible lender and investor.

The state proposals mark the latest flashpoint for US Republicans in their attack on companies’ growing focus on environmental, social and governance (ESG) factors – what some conservatives deride as “awakened capitalism.”

The Republican state lawmakers sponsoring the bills have said they want to prevent the code from being used to violate gun rights enshrined in the Second Amendment to the U.S. Constitution.

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Jansen Owen, a state representative who is the author of legislation in Mississippi, said as a conservative he is concerned that the code could be used, among other things, to track legal ammunition purchases.

“I don’t want card companies to raise interest rates or fees for merchants to deter them from selling guns and ammunition,” Owen told Reuters.

“This MCC would create a backdoor registry” of gun purchases that violate Florida state law, Sen. Danny Burgess told a February hearing on legislation he drafted.


Some trade groups representing banks have expressed concern that the state action could create problems, such as exposing only certain financial companies to enforcement or making it more difficult for consumers to use credit cards across state lines. Some said they are not against the bills, but are concerned about possible consequences.

“We are working on a solution that gets what the sponsors want to do and makes sure there are no unintended consequences,” said Anthony DiMarco, chief of government affairs for the Florida Bankers Association, whose members include Wall Street’s top lenders , such as JPMorgan Chase. & Co and Wells Fargo & Co.

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Wyoming’s proposed Second Amendment financial privacy law stalled last month. Scott Meier, president of the Wyoming Bankers Association, said lawmakers were concerned about whether the proposal could expose local banks to fines, even though they had little to say about how payment networks and processors adopt the code.

“Banks don’t set these codes,” Meier said.

Some Democrats and gun control advocates have expressed concern that the bills could reduce the effectiveness of the code in detecting purchases of concern. They have cited cases where people who carried out mass shootings bought guns on credit.

Proponents of the code have said it will allow financial institutions to better assist law enforcement agencies in investigating gun violence crimes.

Adam Skaggs, chief counsel for the gun safety group Giffords Law Center to Prevent Gun Violence, expressed his opposition to the Republican proposals.

“The only thing they’re protecting is the rights of criminal gun buyers,” Skaggs said of the legislation.

Skaggs also said the legislation could lead to unpredictable consequences, such as pushing gun retailers to become cash-only businesses.

“We’re wading in uncharted waters here,” Skaggs said.

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The new code doesn’t show specific items purchased, but identifies where a person has shopped by adding gun stores to a list of hundreds of existing store categories, including snowmobile dealers and wig stores.

Peter Pope, a special counsel for Manhattan District Attorney Alvin Bragg, said the codes would allow banks to flag suspicious purchases, such as when people buy a single gun from multiple stores to avoid the forms required for multiple purchases — much like banks already mark other transactions.

“If the banks could raise their hand when they see signs of money being moved around for narcotics, they could raise their hand for arms trafficking,” Pope said.

Visa Inc declined to comment on state accounts. Other payment card companies Discover, Mastercard Inc and American Express Co did not respond to requests for comment. A JPMorgan representative declined to comment. Wells Fargo did not immediately comment.

Owen, the Mississippi state legislator, said he expects payment companies to resolve any technical issues the bills may cause.

“I think the credit card companies will have to adapt state by state,” Owen said.

(Reporting by Ross Kerber in Boston; editing by Will Dunham and Simon Jessop)

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