Two dozen Republican attorneys general (AGs), led by Tennessee Attorney General Jonathan Skrmetti and Montana Attorney General Austin Knudsen, sent a letter to the CEOs of credit card giants Visa, American Express, and Mastercard, warning them to halt plans that would add a new merchant category code for gun retailers. The International Organization for Standardization (ISO) recently voted to create the new merchant category code for gun stores to use when processing credit and debit card transactions. The letter argues the ISO’s vote was prompted by years of pressure “from ideologues and accomplished via an application by the union-owned Amalgamated Bank.”
The AGs threatened legal action against the companies if they adopt their plans to implement the new category code. The letter further expressed concern that implementing a new sales code for gun merchants would infringe on gunowners’ constitutional rights and potentially violate antitrust and consumer protection laws. The letter goes on to say the new code will not protect public safety and violates “the constitutionally protected right to purchase firearms” by unfairly singling out law-abiding merchants and consumers alike.
However, advocates of the new code argue it could flag mass shooters and gun traffickers. Further, supporters say the move is similar to the Suspicious Activity Reports (SARs) already required of financial institutions. The letter seeks to counter this analogy by pointing out that SARs are specifically required by law and came about by balancing public safety and personal privacy. Gun store sales are now classified with a general merchandise or sporting goods category and adding the new merchant code would not detail specifically what the customer bought. The Republican AGs argued that the new code will result in the collection of vague and misleading information. For example, the new code would not recognize the difference between the purchase of a gun safe and a firearm. Nor would the code capture firearm purchases made at department stores, resulting in arbitrary disparate treatment of “gun store” merchants and consumers.
More importantly, the letter argues, tracking this information could result in its misuse and “tracking this data only matters if [the credit card] institutions are considering using that information to take further, harmful action — like infringing upon consumer privacy [and] inhibiting constitutionally protected purchases.”
The letter also asserted that “[t]he new code for gun stores is the result of transnational collusion between large corporations leveraging their market power to further their owners’ desired social outcomes.” It further claims that activists pressured the ISO to adopt the policy to circumvent and undermine the “American legislative process” and will have a chilling effect on the exercise of a constitutional right.
The Republican AGs who signed the letter concluded by noting their intent to use the full scope of their legal authority to “protect our citizens and consumers from unlawful attempts to undermine” constitutional rights.
Credit card companies have said they will continue to process legal purchases, regardless of the new merchant code. This aligns with credit card policies like Visa’s that prohibits financial institution members from declining transactions based on the merchant code.
The new merchant code is caught in the crosshairs of a topic that has been a political flashpoint for years, often with strong, wide-ranging opinions on the subject. We will continue to monitor how major companies navigate the potential use of the merchant code and the inevitable regulatory scrutiny and litigation that will follow from implementation of the new merchant code.