Starting Monday, a California law will require credit card networks like Visa And MasterCard to provide banks special sales codes which can be assigned to gun stores in order to track their sales.
But new laws will have exactly the opposite effect in Georgia, Iowa, Tennessee and Wyoming by banning the use of gun store-specific codes.
The conflicting laws highlight what has quietly emerged as one of the most heated debates over gun policy in the country, dividing state capitals 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 to 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 in the banking system that says, ‘Enough! We’re putting our foot 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 worry that the retail code could raise unwarranted suspicions about gun buyers who haven’t done anything wrong. In the past 16 months, 17 states with GOP-led legislatures have passed measures banning a gun store code or limiting its use.
“We see 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 the tracking code.
The new laws deepen a broad national divide over gun policy. Last week, U.S. Surgeon General Vivek Murthy said gun violence, a public health crisisciting a growing 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 issues. 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 strengthened laws for people who don’t have concealed carry permits, requiring a seven-day waiting period for gun purchases, more than double the three-day turnaround time for a federal background check.
States have also responded differently to recent mass shootings. In Maine, where an Army reservist 18 people killed and 13 others injured, the Democratic-led Legislature passed a series of new gun restrictions. After school shootings in Iowa and Tennessee, Republican-led legislatures took steps that could allow more trained teachers to Bringing guns into classrooms.
The wave of legislation targeting gun store category codes addresses a behind-the-scenes aspect of electronic financial transactions. The Geneva-based International Organization for Standardization sets thousands of voluntary standards in a variety of areas, including category codes for everything from bakeries to boat dealerships to bookstores.
These category lists are distributed by credit card networks to banks, which assign particular codes to the companies whose accounts they manage. Some credit card issuers use category codes for customer loyalty points.
The codes can be used by financial institutions to help identify fraud, money laundering or unusual purchasing patterns reported as suspicious activity to the U.S. Treasury Department’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 result in law enforcement follow-up, and an even smaller percentage result in prosecution, according to the Bank Policy Institute, a trade group representing major banks.
Stores selling firearms were previously grouped with other retailers in merchant category codes. Some were classified as sporting goods stores, others as miscellaneous and specialty retail stores.
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. The major credit card networks initially said they would implement it. but I backed away under pressure from conservative politicians and the gun industry.
Munoz, who helped lead the effort to establish the gun store code, noted that credit cards were used to buy guns and ammunition for some of the country’s deadliest mass shootings.
The goal of a code for gun dealers is to detect suspicious patterns, such as someone with little gun purchasing history suddenly spending large sums at multiple gun stores over a short period of time . Once alerted by the banks, authorities could investigate, potentially preventing a mass shooting, Munoz said.
California’s new law requires credit card networks to make the gun codes available to banks and other financial institutions by Monday. Those entities then have several months to determine which of their business customers should be classified 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 aligned with those in California next May.
“If someone were suspiciously buying a large number of guns, it would be very difficult to know right now,” said Phil Ting, a California Democratic state assemblyman and sponsor of the new law. “You wouldn’t be able to tell if they were footballs, golf balls or basketballs.”
Even with a gun store code, it will not be possible to know whether a particular sale is for a rifle, a safe, or another product such as hunting clothing.
State laws banning gun store codes have varying effective dates, but generally allow state attorneys general to seek court injunctions against financial institutions using the codes, with potential fines reaching thousands of dollars.
The merchant code could encourage 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 reclassified, Eldridge said he has already installed an ATM in his store.
“Viewed benignly, this code is an attempt to stigmatize gun owners,” Eldridge said. “But what’s more troubling is that it’s another attempt by the private sector to circumvent the federal government’s ban on creating a gun registry.”
Iowa Sen. Jason Schultz, Republican sponsor of a law banning the gun code, said he was concerned that federal agents could access data on gun purchases from financial institutions , and then use them as justification to raid gun owners’ homes and violate their Second Amendment rights.
“States are going to have to make a choice,” he said, “whether they want to follow California’s lead or whether they want to uphold the original intent of the U.S. Constitution.”
