It will flag suspicious sales and reduce gun crime: Credit card industry representatives revealed new way of tracking firearm and ammunition purchases
A new way of tracking the purchase of firearms and ammo has been given the go light by members of the credit card industry. This is a step that advocates say would help identify questionable sales and minimize the number of crimes involving firearms.
During a meeting this week, the International Standards Organization (which is responsible for setting rules across the entire financial services industry) came to the conclusion that a new merchant category code should be developed for stores that sell firearms and ammunition, and they announced their decision on Friday. The decision was made as a result of increasing pressure placed on credit card firms by Democrats in Congress who pushed for the establishment of the code.
Merchant category codes are made up of four digits and are utilized in a wide variety of industries as a mechanism to identify businesses in a way that does not disclose the specific products that customers have bought from those retailers. Credit card companies designate establishments that sell firearms as either “5999: Miscellaneous retail stores” or “5941: Sporting Goods Stores” at the present time. This is done in order to reduce the risk of fraud committed by credit card companies.
In much the same way that 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, a new code for firearms merchants could be used to flag potentially suspicious purchasing patterns to law enforcement. These patterns could suggest anything from identity theft to terrorist financing.
They refer to a number of historic mass killings that were sponsored with credit cards as evidence that the code might be a good tool to help law enforcement identify bad actors. Supporters feel the code could be a useful tool to help law enforcement identify bad actors.
In the two months leading up to his attack in which he killed 12 people and injured 70 others, the shooter who terrorized a movie theater in Colorado in 2012 charged more than $9,000 worth of guns, ammunition, and tactical gear. In total, the attack cost more than $9,000. The individual who opened fire at the Pulse Nightclub in Orlando, killing more than forty-nine people, charged more than twenty-six thousand dollars’ worth of weapons and ammo to credit cards. And the shooter who carried out the attack in Las Vegas in 2017 that resulted in the deaths of 59 people spent about $95,000 on dozens of firearms.
According to an investigation that was conducted by CBS News in June, the major credit card companies Mastercard, American Express, and Visa initially fought the formation of a merchant category code for gun and ammo merchants.
The application for the code was authorized by the leadership inside the International Standards Organization that is responsible for financial services after a committee that includes representatives from the main credit card firms was unable to reach a consensus on it.
Visa had raised some reservations with the concept. In a letter that was sent by Visa on Wednesday in response to congressional Democrats who supported the plan, the company stated, “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.” CBS News was able to obtain a copy of the letter.
Visa wrote, “We understood Amalgamated Bank’s request to be justified, at least in part, by an interest in blocking transactions that would fall under such a new category, and Visa’s rules expressly prohibit blocking of legal transactions under an MCC.” Amalgamated Bank requested that Visa block transactions that would fall under the new category of “such a new category.”
We now turn our focus to how it will be implemented by merchants and their banks as we continue to support lawful purchases on our network while protecting the privacy and decisions of individual cardholders,” Mastercard said in a statement to CBS News after the code was approved. “This is exactly how we would manage the process for any other appropriate MCC, like a bicycle shop or sporting goods store.”
The following is a quote from American Express that was provided to CBS News: “It is important to note that MCC codes are one of many data points that help us understand the industries in which our merchants operate. We are focused on ensuring that we have the right controls in place to meet our regulatory and fiduciary responsibilities as well as prevent illegal activity on our network.”
In July of 2021, the New York-based Amalgamated Bank was the organization that initiated the process of developing a code to track the purchases of firearms and ammunition. After a string of tragic mass shootings in which young men utilized high-powered weapons that were purchased with credit cards, they recommitted themselves to the cause and redoubled their efforts.
Amalgamated Bank, which boasts of being the nation’s oldest socially responsible financial institution, was established by labor union members about a century ago.
Priscilla Sims Brown, the President and Chief Executive Officer of Amalgamated Bank, stated that “We all have to do our share to combat gun violence.” This action answers the call of millions of Americans who want safety from gun violence, and we are proud to have led the broad coalition of advocates, shareholders, and elected officials that achieved this historic outcome. “And it sometimes starts with illegal purchases of guns and ammunition. The new code will allow us to fully comply with our duty to report suspicious activity and illegal gun sales to authorities without blocking or impeding legal gun sales.”
The International Standards Organization turned down Amalgamated Bank’s application on two separate occasions when the bank requested to develop a code. Documents that were examined by CBS News reveal that individuals working in the credit card sector were members of an internal committee within the organization that had in the past suggested that the application be turned down.
An employee of American Express wrote that it is difficult to find specific MCC codes in confined store spaces. [Citation needed] If there isn’t a compelling justification for the big list, “Managing long lists of tightly defined MCCs might become a nuisance,” according to the article.
The appeal that Amalgamated submitted to the International Standards Organization was turned down in February. The bank was informed in an email that a new code for dealers of firearms and ammo would fail to capture “the sales at sporting goods stores” while at the same time placing a “strain” on smaller businesses.
In June, the organization stated to CBS News that the credit card companies were not responsible for the decision and that employees from those companies merely advised the committee, were serving in a personal capacity, and “do not represent the views of their employer.” The organization also stated that those who pushed to reject Amalgamated’s application did so “based on their expertise.”
The bank submitted another application for the merchant category code before the end of June.
Even though the application was accepted, the new merchant category has not yet been given a code value at the international level. Despite this, the bank is urging rapid implementation among credit card providers because these businesses normally adhere to the criteria.
On September 1, a group of senators led by Senator Elizabeth Warren and Representative Madeleine Dean issued letters to American Express, Visa, and Mastercard, asking each firm for their current opinion on the creation of the code. The letters were submitted by the group. In addition, they enquired about the role that each credit card corporation played in “supporting, opposing, or delaying” the process as industry representatives on the committee of the standards body that evaluates applications for new merchant category codes.
Senator Elizabeth Warren issued the following comment to CBS News after the permission was announced: “This approval is a significant step towards strengthening coordination with law enforcement and avoiding gun violence.” “In order for this new merchant code to reach its full potential, it is necessary for each and every financial institution and method of payment to take initiative and begin implementing it.”