Bid to ID gun store sales via cards advances
New code is aimed at detecting suspicious transactions, but how many will use it?
An organization that sets standards for business transactions has voted to create a code for gun stores to use when processing credit and debit card transactions, a move long sought by gun safety advocates who say it will help law enforcement officials spot suspicious purchases.
The decision by the group, the International Organization for Standardization, or ISO, is likely to set off a political firestorm in Washington and around the country as well as a debate among banks and companies about how and even whether to follow the new standard.
ISO did not respond to a request for comment. But on Friday, Amalgamated Bank, which has helped lead the effort, received a letter, reviewed by The New York Times, confirming the decision.
“This approval is an important step towards improving coordination with law enforcement and preventing gun violence,” said Sen. Elizabeth Warren, DMass., one of the lawmakers who have been vocal on the issue. “In order for this new merchant code to be maximally effective, every financial institution and payment system needs to step up and put it to use.”
Letitia James, the New York attorney general, called the decision “a big victory,” adding, “I urge credit card companies to take the next step and flag suspicious transactions on gun and ammunition sales, like they do for fraud and money laundering.” Many of the banks and credit card companies in question are based in New York.
A series of articles in the Times in 2018 identified that the guns used in a majority of the most deadly mass shootings in America had been bought legally with credit cards. None of the purchases were flagged by credit card companies or banks.
Virtually every retailing category in the United States has a code that is attached to each credit card transaction — hair salons have one code, for example, while movie theaters have another. But, until now, there was no code for gun stores, often making those transactions indistinguishable within the financial system from those at a retailer that sold fishing rods or tents.
Gun rights advocates say giving gun stores a specific code — known as a Merchant Category Code — could be used to block gun transactions or track gun owners.
After the terrorist attacks of Sept. 11, 2001, Congress passed a law, aimed at preventing domestic terrorism, that generally requires banks to flag suspicious transactions. But banks do not know what individual items were purchased with a credit card or if a retailer is a gun seller. Gun safety advocates hope the new merchant code will change this.
Most credit card companies and banks have either fought the new code or been silent on the issue. For several years, Visa and Mastercard have opposed adding the code. Behind the scenes, some company officials favored the code, but they publicly rejected it out of fear of angering politicians who support gun rights.
Amalgamated Bank made an application to ISO for the code this spring, arguing that it was necessary to identify credit risk. It had also applied for the code earlier in the year but was rejected.
After Amalgamated reapplied for the code, it received support from political leaders across the country. Dozens of senators and members of Congress sent the credit card companies letters supporting the proposal. Several pension funds called for the card companies to disclose whether they supported or had tried to reject the code. It appears the campaign worked.
“We all have to do our part to stop gun violence,” Priscilla Sims Brown, president and CEO of Amalgamated Bank, said in a statement Friday. “The new code will allow us to fully comply with our duty to report suspicious activity and illegal gun sales to authorities.”
It is unclear, however, whether the new code will be used.
In a letter Friday to Warren and dozens of other lawmakers, Robert B. Thomson III, a senior vice president of Visa, said the company is not a member of ISO and “does not have authority over ISO's standards and processes.”
“We believe that asking payment networks to serve as a moral authority by deciding which legal goods can or cannot be purchased sets a dangerous precedent,” he wrote.
A spokesperson for Visa did not reply to an email seeking comment.
A spokesperson for Mastercard, Seth Eisen, maintained that the company believed that reducing gun violence should be the job of Congress. He said the company would “turn our focus” to how gun sellers and banks would put the new code into effect.