Card Networks Pressed To Track US Gun Purchases

September 2, 2022
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Mastercard and American Express have been pushed by lawmakers in their home state to mark gun purchases with a dedicated merchant tag as the number of mass shootings is growing across the country.

Mastercard and American Express (Amex) have been pushed by lawmakers in their home state to mark gun purchases with a dedicated merchant tag as the number of mass shootings is growing across the country.

Fifty New York state legislators have signed a letter that urges Mastercard and Amex to support the creation of a unique merchant category code (MCC) for gun and ammunition stores.

“We must fight for public safety through every tool at our disposal: reducing the flow of guns into our communities, working with police to take on crime, and demanding that businesses do their part. Communities could stop paying the price for gun violence if credit card companies did their part to categorise gun purchases and flag suspicious activity to law enforcement agencies,” said New York state attorney general (AG) Letitia James.

“There are categories for nearly every purchase, but none for the multi-billion-dollar gun industry,” the AG stressed.

An MCC is a four-digit code that helps credit card companies classify businesses by the types of goods and services sold. The code does not show what product a consumer purchased, instead it shows that the consumer made a purchase from a particular type of business.

These codes help financial institutions to detect any unusual activity and submit a suspicious activity report to law enforcement.

Although there are specific categories for nearly all purchases, from groceries to airline tickets and even a separate code for carpentry contractors, there is no unique code to tag gun purchases.

Firearms and ammunition stores are currently categorised as “miscellaneous and specialty retail stores” both in Mastercard and Visa manuals. The same category includes atlas stores, party supply stores, silk flower shops, ice dealers, beauty supply stores and bottled water dealers, in addition to firearm and ammunition stores.

The more than four dozen lawmakers are now pushing Amex and Mastercard to support the establishment of a unique code for gun and ammunition stores, which they hope could help prevent mass shootings.

Setting the standards

Although credit card companies use merchant category codes, it is the International Organization for Standardization (ISO) that sets and maintains the MCC guidelines.

Amalgamated Bank, the largest union-owned bank in the US that calls itself a socially responsible financial institution, has in recent years brought proposals before the ISO to create a merchant category code for gun retailers.

According to the bank, firearms and ammunition used in many of the mass shootings in recent years were paid for by credit cards. Financial institutions could set up software to detect suspicious activity the same way they do with fraud, human trafficking or terrorism financing, if gun purchases were tagged with a unique code, Amalgamated argues.

“There may be gun sales that are intended for black markets, or we see patterns of gun purchases being made at multiple gun shops,” Amalgamated CEO Priscilla Sims Brown previously told CBS Mornings.

Banks could write algorithms to flag potentially suspicious activities and provide that information to the authorities to investigate, Sims Brown said.

However, after Amalgamated filed a second proposal this year, CBS News reported that the application has encountered opposition from employees at Visa, Mastercard and Amex who sit on an internal committee within the ISO.

The standard-setting body is expected to schedule a vote on the application in the coming days.

Pressure on card networks is mounting

In addition to the New York legislators, New York City Comptroller Brad Lander, Mayor Eric Adams and shareholders of the card networks have sent letters to Amex, Mastercard and Visa pushing them to support the proposal.

“We believe that failure to support the application for an MCC for gun and ammunition stores will result in lost lives, as well as regulatory, reputational, and litigation risks that may threaten the company’s long-term shareholder value,” the letters say.

The pension funds also filed a shareholder proposal with Amex and Mastercard, asking their boards to justify the reasons for their position on the application.

The four pension funds together own 1.74m combined Amex shares valued at $241m; 2.6m combined Mastercard shares valued at $834m; and 4.8m combined Visa shares valued at $951m.

“When it comes to guns falling into the wrong hands, we must find upstream solutions before we’re faced with downstream consequences — because downstream consequences are lost lives,” said Mayor Adams.

“Credit card companies have an obligation to stop bad actors, including mass shooters and firearm traffickers, from exploiting their systems to buy the firearms and ammunition they need to cause unimaginable harm,” said Igor Volsky, founder of Guns Down America.

The card networks did not respond to requests for comment by the time of publication.

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