Analysis – US Republicans seek to block state-level gun sales codes

Ross Kerber

(Reuters) – Legislation being pushed by Republicans in several U.S. states seeks to limit the use of a planned merchant code for credit card transactions at gun stores designed to detect suspicious sales of firearms and ammunition, undermining a tool hailed by gun control advocates.

Bills have been introduced in states including Texas, Florida, Mississippi, Oklahoma, West Virginia, and Wyoming.

They will ban or restrict the use by banks or payment processors of the “merchant category code,” or MCC, approved for gun dealers in September by the Geneva-based International Organization for Standardization (ISO), a non-governmental organization that develops standards on various aspects of the arms trade. technology and production.

Major credit and debit card companies have pledged to use this code. Discover Financial Services said it will introduce it in April and that it is following other companies. Discover is the first company to publicly announce the schedule.

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

The government proposals mark the latest flashpoint for US Republicans in their attack on the growing corporate focus on environmental, social and governance (ESG) — what some conservatives deride as “waking up capitalism.”

Republican lawmakers behind the bills said they want to prevent the code from being used to violate gun rights enshrined in the Second Amendment to the US Constitution.

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

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

“This MCC will create a black registry” of gun purchases in violation of state law in Florida, State Senator Danny Burgess said at a February hearing on the bill he drafted.

The story goes on

‘UNINTENDED CONSEQUENCES’

Some trade groups representing banks have raised concerns that government measures could create problems, such as exposing only certain financial companies to enforcement or making it difficult for consumers to use credit cards out of state. Some said they had no objection to the bills, but were worried about the possible repercussions.

“We are working on a solution that delivers what backers want and ensures there are no unintended consequences,” said Anthony DiMarco, head of government relations for the Florida Bankers Association, which includes leading Wall Street lenders such as JPMorgan Chase. . & Co and Wells Fargo & Co.

Wyoming’s proposed “Financial Privacy Second Amendment” bill stalled last month. Scott Meyer, president of the Wyoming Bankers Association, said lawmakers are concerned whether the proposal could expose local banks to penalties, although they have little to say about how payment networks and processors are adopting the code.

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

Some Democrats and gun control advocates have raised concerns that the bills could reduce the code’s effectiveness in detecting disturbing purchases. They cited cases when people who carried out mass executions bought weapons on credit.

Supporters of the code said it would allow financial institutions to better assist law enforcement in investigating gun crimes.

Adam Skaggs, general counsel for gun safety at Giffords Law Center, disagreed with the Republicans’ proposals.

“The only thing they protect is the rights of criminal gun buyers,” Skaggs said of the law.

Skaggs also said the law could lead to unforeseen consequences, such as gun retailers moving to cash-only operations.

“Here we enter uncharted waters,” Skaggs said.

The new code will not display specific items purchased, but will identify where a person has shopped, adding gun stores to a list of hundreds of existing retail categories, including snowmobile vendors and wig stores.

Peter Pope, special adviser to Manhattan District Attorney Alvin Bragg, said the codes would allow banks to flag suspicious purchases, such as when people buy the same gun from multiple stores, to avoid mandatory forms for multiple purchases – just as banks are already flagging other transactions.

“If banks can raise their hand when they see signs of drug money being moved, then they can raise their hand for arms trafficking as well,” Pope said.

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

Owen, the Mississippi state legislator, said he expects payment companies to be able to resolve any technical issues that the bills may bring.

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

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

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