California set to track credit card sales at gun stores as 17 other states pass laws banning it

California set to track credit card sales at gun stores as 17 other states pass laws banning it

California set to track credit card sales at gun stores as 17 other states pass laws banning it

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

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

The conflicting laws highlight what has quietly emerged as one of the country’s newest gun policy debates, dividing state capitols along familiar partisan lines.

Some Democratic lawmakers and gun control activists hope the new retail sales tracking code will help financial institutions flag suspicious gun-related purchases for 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 the banking system takes to say ‘Enough! We’re putting our foot down,'” said Hudson Munoz, executive director of the nonprofit advocacy group Guns Down America. “They can’t use our system to facilitate gun crime.”

But many Republican lawmakers and gun rights advocates fear the retail code could raise unwarranted suspicions about gun buyers who have done nothing wrong. In the past 16 months, 17 states with GOP-led legislatures have passed measures banning a firearms sales code or limiting their use.

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

The new laws add to the wide national divide over gun policy. Last week, U.S. Surgeon General Vivek Murthy declared gun violence a public health crisis, citing a rising number of gun-related deaths, including more than 48,000 in 2022. The move was quickly criticized by the National Rifle Association.

States have dug opposing trenches on 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 without concealed carry permits, requiring a seven-day waiting period for gun purchases, which is more than double the period three days for a federal background check.

States have also responded differently to recent mass shootings. In Maine, where an Army reservist killed 18 people and wounded 13 others, the Democratic-led Legislature passed a variety of new gun restrictions. After school shootings in Iowa and Tennessee, Republican-led legislatures took steps that could allow more trained teachers to bring guns into classrooms.

The wave of legislation targeting firearms store category codes addresses a hidden aspect of electronic financial transactions. The Geneva-based International Organization for Standardization sets thousands of voluntary standards for a variety of fields, including category codes for everything from bakeries to ship dealers to bookstores.

Credit card networks distribute those category lists to banks, which assign specific codes to the companies whose accounts they manage. Some credit card issuers use category codes for customer reward points.

Financial institutions can use the codes to help identify fraud, money laundering, or unusual purchasing patterns that are reported as suspicious activity to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network.

Banks and other depository institutions filed more than 1.8 million confidential reports in 2022, flagging more than 5.1 million suspicious activities. About 4% of annual reports lead to follow-up by authorities and an even smaller percentage to prosecution, according to the Bank Policy Institute, a trade group representing big banks.

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

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 it but backed off under pressure from conservative politicians and the arms industry.

Muñoz, who helped lead the effort to establish the firearms store code, noted that credit cards were used to purchase guns and ammunition for some of the country’s deadliest mass shootings.

The goal of a gun dealer code is to detect suspicious patterns, such as a person with little gun purchasing history suddenly spending large amounts at several gun stores in a short period of time. Once alerted by the banks, authorities could investigate, which could prevent a mass shooting, Munoz said.

California’s new law requires credit card networks to make firearms codes available to banks and other financial institutions by Monday. Those entities will have several months to determine which of their merchant customers should be categorized as gun stores and assign 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 code mandates this year that will go into effect with California’s in May of next year.

“If someone had suspiciously purchased a large number of firearms, it would be very difficult to know at this point,” said California state Assemblyman Phil Ting, a Democrat who sponsored the new law. “You couldn’t tell if they were soccer balls, golf balls or basketballs.”

Even with a firearms store code, it will not be possible to know if a particular sale is for a rifle, a storage safe, or some other product such as hunting clothing.

State laws banning gun store codes have varying effective dates, but generally allow state attorneys general to seek injunctions against financial institutions that use the codes, with potential fines reaching thousands of dollars.

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

“Viewed more benignly, this code is an effort to stigmatize gun owners,” Eldridge said. “But a more troubling concern is that it is yet another attempt by the private sector to circumvent the federal government’s ban on creating a gun registry.”

Iowa state Sen. Jason Schultz, a Republican sponsor of the legislation banning the firearms code, said he feared federal agents could gain access to data on gun store purchases from financial institutions and then use it as justification to raid gun owners’ homes and infringe on their Second Amendment rights.

“States are going to have to choose,” he said, “whether they want to follow California or whether they want to support the original intent of the U.S. Constitution.”

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