Starting Monday, California law requires credit card networks like Visa and Mastercard to provide banks with a special retail code they can assign to gun stores so they can track sales.
But the new law will do the exact opposite in Georgia, Iowa, Tennessee and Wyoming by prohibiting the use of certain gun store codes.
The conflicting legislation highlights what has quietly emerged as one of the nation’s most recent gun policy debates, dividing the nation’s capital 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 agencies, which could prevent 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 going down,'” said Hudson Munoz, executive director of the nonprofit advocacy group Guns Down America. “‘You can’t use our system to facilitate gun crime.'”
But many Republican lawmakers and gun rights advocates fear the retail code could cast undue suspicion on gun buyers who have done nothing wrong. Over the past 16 months, 17 states with GOP-led legislatures have passed measures banning gun store codes or restricting their use.
“We see this as the first step by gun-control advocates to limit the legal trade in firearms,” ​​said Lawrence Keane, senior vice president of the National Shooting Sports Foundation, an industry group behind the law restricting the use of tracking codes.
The new law deepens the national divide over gun policy. This past week, US Surgeon General Vivek Murthy declared gun violence a public health crisis, citing the number of deaths related to firearms, including more than 48,000 in 2022. The move was quickly criticized by the National Rifle Association.
States have dug opposing trench lines over other gun policies. On July 4, for example, Republican-led Louisiana will become the 29th state to allow citizens to carry concealed handguns without a permit.
In contrast, Democratic-led New Mexico this year tightened its laws for those without a concealed-carry permit, requiring a seven-day waiting period to buy a gun, which is more than twice the three days required for a federal background check. .
States have also responded differently to recent mass shootings. In Maine, where a reservist killed 18 people and wounded 13 others, the Democratic-led Legislature passed a series of new gun restrictions. After the school shootings in Iowa and Tennessee, the Republican-led legislature took steps that could allow more trained teachers to bring guns into the classroom.
The emergence of legislation targeting firearms store category codes is targeting the behind-the-scenes aspects of electronic financial transactions. The International Organization for Standardization, based in Geneva, sets thousands of voluntary standards for various fields, including category codes for all types of businesses, from bakeries to ship merchants to bookstores.
The list of categories is distributed by the credit card network to the bank, which assigns a specific code to the business whose account is handled. Some credit card issuers use category codes for customer reward points.
These 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 US Department of the Treasury’s Financial Crimes Enforcement Network.
Banks and other depository institutions filed more than 1.8 million confidential reports in 2022 giving more than 5.1 million suspicious activities. About 4% of annual reports lead to follow-up by law enforcement and even a small percentage to prosecution, according to the Bank Policy Institute, a trade group representing large banks.
Stores that sell guns have previously been grouped with other retailers in the merchant category code. Some have been classified as sporting goods stores, others as miscellaneous and specialty retail stores.
In a rumor from New York-based Amalgamated Bank, which works with gun control groups, the International Organization for Standardization adopted a new four-digit category code for gun and ammunition stores in 2022. The first major credit card network said it would implement it. but backed down under pressure from conservative politicians and the gun industry.
Munoz, who helped lead the effort to establish a gun store code, noted credit cards were used to buy weapons and ammunition for some of the nation’s deadliest mass shootings.
The goal of the gun dealer code is to spot suspicious patterns, like someone with no history of buying guns who suddenly spends a lot at multiple gun stores in a short period of time. Once alerted by the banks, authorities can investigate, potentially disrupting mass shootings, Munoz said.
California’s new law requires credit card networks to make firearm codes available to banks and other financial institutions by Monday. The entity then has a few months to determine which business clients should be categorized as weapons stores and assign them a new code by May 1.
Visa, the nation’s largest payments network, recently updated its merchant data manual to add a firearms code to comply with California law.
Democrat-led legislatures in Colorado and New York this year also passed unified gun code mandates to kick in with California next May.
“If someone is suspected of buying a large number of firearms, it’s going to be very difficult to identify them now,” said California state Assemblyman Phil Ting, a Democrat who sponsored the new law. or a golf ball or a basketball.”
Even with the firearm store code, it will not be possible to know whether the sale is specifically for guns, safe storage or some products such as hunting clothing.
State laws banning gun store codes have varying effective dates, but typically allow state attorneys general to seek court injunctions against financial institutions that use the codes, with potential fines of up to thousands of dollars.
Merchant codes could lead more people to buy guns with cash instead of credit to protect privacy, said Dan Eldridge, owner of Maxon Shooter Supplies in suburban Chicago. Although his business has not yet been recategorized, Eldridge said he has placed an ATM in the store.
“Viewed most benignly, this code is an attempt to stigmatize gun owners,” Eldridge said. “But another worrisome concern is that the private sector is running around the Prohibition against the federal government creating a gun registry.”
Iowa state Sen. Jason Schultz, a Republican sponsor of the gun code ban, said he feared federal agents could gain access to data on gun store purchases from financial institutions, and then use that as justification to raid the homes of gun owners. weapons and offense. Second Amendment rights.
“States have to make a choice,” he said, “whether they want to follow California or whether they want to uphold the original intent of the U.S. Constitution.”