Banks Could Soon Track Gun and Ammo Sales With New Firearm Merchant Code

It’s no wonder many people extol the virtues of cash.

That’s not to say reporting “suspicious” behavior based on credit or debit card purchases of firearms and ammunition would be a bad thing if the resulting data helped stop a crime before it occurred. On the other side, the issue is the actual practice of tracking the sale itself and then asking who and what has access to that type of data.

In New York State, Gov. Kathy “Lockdown” Hochul has been pushing for industry groups to take more action with firearm sales either by refusing to allow electronic payment methods or by tracking the sales as described under the new standard. This is similar to how the State attacked groups like the National Rifle Association by leaning on their payment processor to stop letting them accept electronic donations.

The new standard, devised by the aptly named International Standards Organization, will create new and separate merchant codes for transactions involving guns or ammo:

The International Standards Organization, which sets rules across the financial services industry, agreed to create a new merchant category code for gun and ammunition retailers at a meeting this week, and announced the decision Friday. The decision came amid mounting pressure on credit card companies by Democrats in Congress who urged the code’s creation.

Merchant category codes are made up of four digits and are used across all sorts of industries as a means to classify retailers, while not revealing individual product purchases. Credit card companies currently lump firearm retailers in with other outlets, classifying them as either “5999: Miscellaneous retail stores” or “5941: Sporting Goods Stores.”

With a new code for firearms merchants, potentially suspicious purchasing patterns could be flagged to law enforcement — much the same way banks and credit unions made more than 1.4 million suspicious activity reports in 2021 for other types of transactions that might suggest anything from identity theft to terrorist financing.

According to the way it reads, it’s not that a transaction can identify the products purchased, but the new code would be created for any transaction that occurred at a firearms store, either brick and mortar or online.

For the online scenario, it would be ammunition being sold as firearms cannot be purchased online directly without traveling through a licensed dealer for background checks before the sale occurs.

The push for a new four-digit gun tracking merchant code is not a new phenomenon. Congressional Democrats have been pushing for the change for a while now as a way to backdoor some kind of firearm tracking through the banking system:

Sen. Elizabeth Warren, D-Mass., and a group of nearly 40 congressional Democrats are urging credit card companies to track gun and ammunition purchases. It would be the first step to facilitating the collection of data that could help law enforcement identify domestic terrorism threats, they say in a letter sent last week to executives at Mastercard, Visa and American Express.

“Mass shooters have repeatedly financed deadly massacres using credit cards, and Bank CEOs need to step up to save lives,” Warren said. “Financial institutions and payment networks, such as Visa, MasterCard and American Express can and should do everything they can to help law enforcement prevent some mass shootings by identifying suspicious gun purchases through the implementation of this new code.”

Even though the new codes are created, payment processing networks like Visa or Mastercard, for example, are not required to begin using them immediately but will begin looking into how the implementation would work and what effect it would have on their merchants.

Visa actually a stand against the new firearm merchant codes as it would now put payment processors and merchants in the middle of the battle over gun rights and give Congress an escape hatch:

Visa had expressed concerns about the proposal. In a letter obtained by CBS News, sent by Visa on Wednesday in response to congressional Democrats who supported the plan, the company said, “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.”

Visa, to its credit, argues the point about “legal goods” and wonders why merchants, processors, and ultimately the purchasers should suffer increased scrutiny for buying a legal product.

The move is not without detractors, naturally, as the new codes seem like a way to backdoor gun tracking and now ammo tracking into the financial system as an end-run around actual legislation:

The National Rifle Association responded to the Democrats’ request by questioning the intent of the proposal and said they worry about the actual effect it would have on gun purchasers.

“Implying that firearm purchases are suspicious demonstrates an obvious bias these attorneys general hold against choosing to exercise a fundamental constitutional right,’’ spokesman Lars Dalseide told the Journal.

It’s not hard to see obvious ways this system could be expanded or abused. The entire banking system could simply “turn off” your ability to make a purchase at a certain merchant code at any time with electronic payments like credit or debit cards.

The other part of this not being discussed is how your bank statement and the information held by financial institutions for years essentially becomes a registry of sorts if you’ve made purchases at a gun store. All that data is now being cataloged and tracked but since it’s not a government-created gun registry, it’s not something that Congress has to take responsibility for.

Reducing gun violence is a laudable goal and one that should start with prosecuting gun crimes to the fullest extent of the law. Anytime there is a move to regulate or track legal gun and ammo sales, there will be vocal and valid pushback.

As most guns used in crimes are stolen, traded, or bought with cash, this kind of merchant code tracking won’t make much of a dent. Once again, it’ll be law-abiding purchasers scrutinized more than criminals.